Japan's Honda on Tuesday urged Malaysia to ensure a level playing field for non-national auto-makers under the Association of Southeast Asian Nations Free Trade Area.
Honda Malaysia president and chief operating officer Syed Hisham Syed Wazir noted Malaysia's national carmaker Proton had enjoyed preferential treatment for about two decades and said similar privileges should be given to non-national companies under AFTA.
"With the implementation of AFTA, the level playing field should be accorded to all players in the industry who have in many ways contributed to employment, income and economy," he was quoted as saying by Bernama news agency.
Under AFTA, import tariffs for most products in the region were cut to below five percent in the past year.
Malaysia, one of the region's top passenger car markets, obtained a two-year reprieve for its auto industry until 2005 but has said it would defer reducing duties until 2008, a move analysts said reflected deep-seated concerns about the survival of the local car industry.
Syed Hisham said Honda has long-term commitments in Malaysia, with its two-year-old factory based in southern Malacca state and plans to invest a total 374 million ringgit (98.42 million dollars) in its manufacturing operations in the country by 2005.
"We have an investment of 170 million ringgit in our plant in Malacca and although it may not be a huge amount, it is still a committed investment in a new area," he said, adding that the factory employed 1,300 workers and currently produces 20,000 units a year.
Japan's Honda Motor owns 51 percent of Honda Malaysia, while its local partners DRB-HICOM Bhd. and Oriental Holdings hold 34 and 15 percent respectively.
Honda Malaysia's general manager Nik Hamdan Nik Hassan said the company aimed to increase sales by 29 percent this year to 22,000 units. Last year, the company sold 17,087 vehicles, representing a 4.2 percent market share behind Toyota and Nissan in the non-national car segment.
He said sales were improving each month, with average monthly sales of about 2,000 units topped by the City model which made-up nearly half of total sales.
It expects to sell about 2,500 units this year of the new Civic 2.0 litre VTEC and 1.7 litre VTEC models, which were launched earlier Tuesday, despite tough competition, he added.
In March, Honda raised vehicle prices by between three and 13 percent following Malaysia's new tax system ahead of AFTA and also due to pressure from a stronger yen but has said it expected to remain competitive.