Uncertainty driven by a general election and the likelihood of a revised national automotive policy is expected to push Malaysian new-vehicle sales down 2.9% this year following record volume in 2012.

But industry analyst Frost & Sullivan remains optimistic about the country’s auto sector, with partner Kavan Mukhtyar, head of the consultancy’s automotive and transportation practice, noting auto makers likely will be cautious in launching new models until the revised policy is announced.

“The overall uncertainty...is likely to restrain fresh demand as well as the significant replacement market,” Mukhtyar says in a statement. The trimming of subsidies to contain the budgetary deficit may lead to higher fuel prices, which in turn may raise the cost of vehicle ownership.

Malaysian new-vehicle sales rose 4.7% to a record 627,753 units in 2012, according to the Malaysian Automotive Assn. That bested Frost & Sullivan’s prediction earlier this month of a 3% gain to 618,000.

“2012 saw the automotive industry bouncing back despite a weak start to the year due to tightening of lending guidelines, supply-chain disruptions from the flood in Thailand and uncertainty revolving around the budget and (national auto policy) in the later part of the year,” Mukhtyar says.

New models expected to be launched in 2013 in Malaysia include the Honda CR-V, Subaru Forester, Kia Rio, Kia Picanto, Kia Forte K3, Range Rover, Honda Brio, Honda Accord and Toyota Corolla Altis.

“The continued tightening of hire-purchase rules and stricter loan approvals is also likely to have a negative impact on (sales of) entry-level vehicles,” Mukhtyar says.

The analyst predicts this year’s car sales will fall 4.7% to 518,000 units as some consumers hold back the purchase of big-ticket items due to the financial uncertainties.

The commercial-vehicle segment is expected to continue growing, driven by strong demand in the construction and oil and gas industries, rising 9.9% to 82,000 units.

Sales in the of subcompact-car segment are seen falling 15% to 50,000 units, due to limited models offered and stricter credit rules.

“The A-segment will continue to shrink as new entry-level customers jump to B-segment offerings, which is a worldwide phenomenon,” Mukhtyar says. “Volume segments such as B, C and (multipurpose vehicles also) will see a drop in sales, despite greater hybrid- vehicle sales and launches of new models.”

With the duty exemption for hybrid vehicles extended until the end of 2013, new models in the pipeline and growing customer acceptance, Frost & Sullivan predicts hybrid sales to nearly double in 2013 to 35,000 units, from an expected 18,000 in 2012.

Mukhtyar says the challenges to adoption of electric vehicles primarily are consumer concerns regarding maintenance, resale value, cost of ownership, safety and recharging infrastructure.

Deliveries of B-segment small and compact cars likely will decline 4% to 100,000 units, while C-segment midsize sedans will see a 2% dip to 225,000. Sales of D-segment large sedans and premium models are forecast to remain flat at 22,000, while growth in the SUV segment will rise 2% to 19,000.