KUALA LUMPUR, Jan 27 (Bernama) -- The Fair Competition Act, expected to be gazetted by year-end or early 2011, will have a short-term impact on the sale of vehicles.

MIDF Research, however, said the overall outlook for the automotive industry remained positive.

It maintained a three per cent total industry volume growth forecast for 2010, with vehicle sale increasing to 553,000 units versus 536,905 units in 2009, led by the strong demand for national cars and selected foreign makes.

The research house also said if the Act is gazetted, it would also result in the tightening of the Hire Purchase policy as banks would also attempt to mitigate their credit risks.

Under the amended Hire Purchase Act, the process of repossessing cars by the financiers would also be revamped as the current Act gave too much advantage for banks to impose all kinds of charges on consumers when they fail to keep up with their installments.

" But, banks will find other means of making profits. We can expect higher interest rates with banks attaching a higher risk premium, followed by higher processing fees and lower margin of financing," MIDF Research added.

-- BERNAMA