Malaysia’s new-vehicle deliveries plunged 25% in January to 40,948 units, fulfilling industry fears of a tougher market following the government’s introduction of tighter lending guidelines.

The Malaysian Automotive Assn. says the sales slide also could also be attributed to a working month shortened by the Chinese New Year holidays and the backwash from Thailand's flood disaster.

Last year’s Chinese New Year holidays fell in February.

MAA says in a statement it expects this month’s sales volume to be little changed from January’s.

Passenger-car deliveries of 36,864 units in January tumbled 25.7% from prior-year’s 49,606. Commercial-vehicle sales slid 21.1% to 4.084 from 5,175 year-ago.

The January decline followed a December in which sales fell 12.9% from like-2010 to 47,708 units.

Malaysian production in January tumbled 14.7% to 51,403 units, with passenger-car output slipping 16.2% to 46,274, while CVs edged up 1.2% to 5,129.

The country’s new loan-approval process requires that banks use net income instead of gross income to calculate the debt-service ratio for loans. The new rule covers all consumer loans.

Perodua Managing Director Aminar Rashid tells The Star newspaper the loan requirements resulted in a 20% drop in the auto maker’s January sales.

The newspaper says also analysts estimate 70% of loan applications have been rejected since the new rules were put in place.

As a result, Aminar says market-leader Perodua already is expecting a tougher 2012 after delivering 180,000 units last year, 8,000 short of its target.

The Business Times quotes an unnamed brokerage analyst as saying it’s too early to determine whether January’s drop in car deliveries represents a one-off slump or the start of a prolonged decline. “But we are not discounting the possibility of a lower total industry volume this year.”

The Proton Edar Dealers Association Malaysia says the loan rules have severely damaged members' sales, with only 30% of applicants securing car loans so far this year.

The government’s Bernama news agency quotes association President Armin Baniaz Pahamin as saying the auto industry, which supports the country's economic growth, will collapse if the measure is not reviewed.