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ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XI November 2025

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Factors Influencing the Number of National Car Sales in Malaysia

Suriani Sukri

, Sharifah Raudzah S Mahadi

, Waeibrorheem Waemustafa

Faculty of Business and Communication, University Malaysia Perlis, Kampus UniCITI Alam, Sungai

Chuchuh 02100 Padang Besar, Perlis, Malaysia

Faculty of Art & Design, University Teknology MARA, Kampus Seri Iskandar, Perak Branch, 32610

Seri Iskandar, Perak, Malaysia

School of Economic, Finance and Banking, University Utara Malaysia, 06010 Sintok, Kedah, Malaysia

Corresponding Authors

DOI: https://dx.doi.org/10.47772/IJRISS.2025.91100350

Received: 26 November 2025; Accepted: 02 December 2025; Published: 10 December 2025

ABSTRACT

The goal of this senior project is to investigate the variables that affect Malaysia's national car sales. The purpose

of the study is to determine how the national car sales rate is affected by the gross domestic product,

unemployment rate, inflation rate, and interest rate. The number of national automobile sales in Malaysia is the

dependent variable (DV) in this study, whilst the gross domestic product, unemployment rate, inflation rate, and

interest rate are the independent variables (IV). The study combines a qualitative research methodology and data

from the internet, including the gross domestic product, unemployment rate, inflation rate, and interest rate as

well as the number of national car sales in Malaysia from 1994 to 2022. Stata is then used to analyse the data.

According to the literature analysis, those factors significantly influence the volume of national auto sales. Gross

domestic product, unemployment rate, inflation rate, and interest rate are considered to be important variables

that affect the volume of national auto sales. According to the study's findings, there is a substantial correlation

between all of the independent factors (gross domestic product, unemployment rate, inflation rate, and interest

rate) and the dependent variable (number of national car sales). The findings indicate that the number of national

car sales in Malaysia is positively impacted by the gross domestic product, the unemployment rate, the inflation

rate, and the interest rate. In conclusion, this study sheds light on the variables affecting the volume of domestic

auto sales. Overall, this study adds to the body of information about the variables affecting the volume of

domestic auto sales in Malaysia and provides guidance for policymakers and auto industry firms.

Keywords: Car Sales, Gross Domestic Product, Unemployment, Inflation, Interest

INTRODUCTION

Proton is a Malaysian automotive manufacturer that has played a significant role in the country's automotive

industry since its establishment in 1983. The company has made notable contributions to the development and

growth of the automotive sector in Malaysia, including the production of various models and achieving significant

sales figures over the years.

Proton's success in Malaysia can be attributed to several factors. One of the key reasons is its position as the

national car brand, which has garnered a sense of patriotism and support from Malaysian consumers. Proton has

been able to establish itself as a trusted and reliable brand in the country, catering to the needs and preferences of

the local market.

Over the years, Proton has introduced a range of models that cater to different segments of the market. These

models include compact cars, sedans, and SUVs, offering a diverse portfolio to attract a wide range of consumers.

Proton cars are known for their affordability, fuel efficiency, and robust performance, which have contributed to

their popularity among Malaysians.

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

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In recent years, Proton has witnessed significant growth in sales in Malaysia. In 2020, despite the challenges

posed by the COVID-19 pandemic, Proton achieved its highest sales volume in eight years, with a total of 109,716

units sold. This was a remarkable achievement for the company, indicating its ability to adapt and thrive in

challenging market conditions.

One of the contributing factors to Proton's success is its partnership with Geely, a renowned Chinese automotive

manufacturer. The collaboration between Proton and Geely has allowed for the exchange of technological

expertise and resources, resulting in the development of high-quality vehicles that meet international standards.

This partnership has also helped Proton expand its reach beyond the Malaysian market, with exports to countries

like Egypt, Pakistan, and Indonesia.

In addition to product quality, Proton has implemented various marketing and promotional strategies to boost

sales in Malaysia. The company has engaged in strategic partnerships and collaborations with popular local and

international brands to create special editions and limited-edition models, attracting consumers with unique

offerings. Furthermore, Proton has invested in marketing campaigns, emphasizing its commitment to innovation,

reliability, and affordability.

The Malaysian government has also played a significant role in supporting Proton's sales through various

initiatives and policies. For instance, the government has introduced measures such as tax incentives and rebates

for Proton car owners, making the brand more appealing and affordable to potential buyers.

Looking ahead, Proton aims to continue its growth trajectory and expand its market share in Malaysia. The

company has plans to introduce new models and innovative technologies to meet evolving consumer demands.

Proton also aims to strengthen its presence in international markets by leveraging its partnership with Geely and

capitalizing on the growing demand for affordable and fuel-efficient vehicles.

In conclusion, Proton has established itself as a leading automotive manufacturer in Malaysia, achieving

significant sales figures and contributing to the growth of the country's automotive industry. Through its

commitment to product quality, strategic partnerships, effective marketing strategies, and government support,

Proton has been able to win the trust and loyalty of Malaysian consumers. With a focus on innovation and

expansion, Proton is poised to continue its success story in the Malaysian market and beyond.

PROBLEM STATEMENT

The Malaysian automotive market has become increasingly competitive as local manufacturers face strong

pressure from international brands. Although the vehicle sector has shown steady growth according to Khamis

and Abdullah (2014), consumer purchasing decisions continue to be shaped by various factors. Leow and Husin

(2015) highlight product quality, pricing, customer satisfaction, trust, perceived value and perceived risk as

important determinants of vehicle sales. Studies on the marketing mix also indicate that certain elements,

particularly location, may have less influence on purchasing decisions compared to other factors (Toh, 2006;

Leng & Chin, 2017; Don et al., 2024).

Despite these findings, there is still limited consolidated evidence on how broader economic conditions influence

car sales in Malaysia. Because the automotive sector contributes to national economic performance and reflects

consumer purchasing power, it is important to understand how macroeconomic indicators affect vehicle demand.

Key indicators such as Gross Domestic Product (GDP), the inflation rate, the unemployment rate and the interest

rate may significantly influence car sales. Yet, their combined effects have not been thoroughly examined within

the Malaysian context.

To address this gap, this study investigates how these economic indicators relate to the number of car sales in

Malaysia between 1994 and 2022. The study seeks to answer the following research questions:

1. To what extent does GDP affect car sales?

2. How does the inflation rate influence car sales?

3. Does the unemployment rate impact car sales?

4. How does the interest rate affect car sales?

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

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In line with these questions, the study aims to determine the relationships between each of these economic

variables and Malaysia’s car sales over the specified period.

By examining these macroeconomic relationships, the study provides insights into the dynamics of Malaysia’s

automotive industry and its interaction with the wider economic environment. This understanding is essential for

policymakers, industry stakeholders and researchers who aim to evaluate economic stability, forecast market

trends and support sustainable growth in the automotive sector.

LITERATURE REVIEW

The Malaysian automotive industry has experienced steady development over the years, supported by national

manufacturers such as Proton and Perodua and strengthened through technological collaborations with

international automotive producers (Khamis and Abdullah, 2014). Prior research indicates that vehicle demand

is shaped by various consumer‑related factors, including product quality, pricing, customer satisfaction, perceived

value and perceived risk (Leow and Husin, 2015). While these studies highlight important behavioural

determinants of purchase intention, they provide limited insight into how broader macroeconomic conditions

influence national car sales, particularly within an increasingly competitive market.

Given the economic relevance of the automotive sector, scholars have examined the effects of macroeconomic

indicators such as Gross Domestic Product (GDP), inflation rate, unemployment rate and interest rate. Sivak and

Tsimhoni (2008) found a positive relationship between GDP and car sales across developing countries, including

Malaysia, suggesting that stronger economic performance enhances consumer purchasing power. Research on

inflation consistently shows that rising price levels suppress vehicle demand, as evidenced by Nawi et al. (2013),

who reported a negative relationship between inflation and passenger car sales. Similarly, unemployment has

been shown to reduce car demand, with studies demonstrating either no significant relationship (Smusin and

Makayeva, 2010) or a negative association (Nawi et al., 2013). Interest rates also play a key role, where lower

lending rates stimulate demand and higher rates constrain vehicle purchases, as supported by Ong (2013) and

further confirmed by Nawi et al. (2013) through tests including ADF, Philip Perron and the Vector Error

Correction Model.

To contextualise these relationships, the Law of Demand provides a theoretical foundation by explaining how

purchasing behaviour responds to changes in price and economic conditions. In the automotive context, stable

economic conditions, favourable loan rates and strong labour market performance enhance consumers’ ability to

purchase vehicles, whereas inflation, unemployment and rising borrowing costs tend to reduce demand.

Integrating these theoretical and empirical findings, this study examines how GDP, inflation, unemployment and

interest rates collectively influence national car sales in Malaysia, forming the basis for the research framework

and hypotheses.

RESEARCH METHODOLOGY

Research design, according to Burns and Grove (2010), is a blueprint for performing a study with maximal control

over issues that may interfere with the validity of the findings. The variables in this study were utilised to evaluate

the association between macroeconomic indicators and Malaysian vehicle sales. The dependent variable in this

study is total automobile sales in Malaysia, whereas the independent variables are GDP (current USD), inflation

rate, UR, and ITR on car loan. Descriptive statistics and quantitative analysis will be used in the study process.

Figure 1 presents the research framework for this study, showing the relationship between the independent

variables, which are Gross Domestic Product (GDP), unemployment rate, inflation rate and interest rate, and the

dependent variable, which is the number of car sales in Malaysia. The figure illustrates how each macroeconomic

indicator is expected to influence national car sales.

The research method used in this study corresponds directly to the relationships shown in Figure 1. This study

adopts a quantitative research design using time series data covering a period of 30 years from 1985 to 2014. The

dependent variable is the total number of car sales in Malaysia, while the independent variables are GDP measured

in current USD, the inflation rate, the unemployment rate and the interest rate on car loans, as shown in Figure 1.

All data were obtained from online sources, and linear regression analysis was carried out using SPSS to examine

the relationship between the variables.

INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)

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Fig. 1 The research design.

The dependent variable in this study is the number of car sales in Malaysia, which represents the total volume of

vehicles sold within a specific period and reflects consumer demand and overall market performance in the

automotive sector. The independent variables consist of key macroeconomic indicators, namely Gross Domestic

Product (GDP), inflation rate, unemployment rate and interest rate. GDP measures the total value of goods and

services produced in a country and indicates overall economic growth and purchasing capacity, while the inflation

rate reflects changes in general price levels and purchasing power. The unemployment rate represents the

proportion of the labour force actively seeking employment and signals economic conditions that may influence

consumers’ ability to purchase vehicles. The interest rate refers to the cost of borrowing, particularly for car loans,

and affects the affordability of vehicle financing and consumers’ willingness to make car purchases.

Method of Data Analysis

The data analysis methods applied in this study are described in detail based on the research design, the type of

data collected and the research objectives. Descriptive statistics, correlation analysis and regression analysis are

used as the primary analytical techniques. All data were processed and analysed using Stata.

FINDINGS AND DISCUSSION

Regression

Table 1. Regression Analysis of Factor Influence and Car Sales

Note: n=100. CS is car sales; GDP is gross domestic product; IR is inflation rate; UR is unemployment rate and

ITR represents the interest rate of Malaysia.

*p<0.10, **p<0.05, ***p<0.01.

Table 1 presents the regression results examining the influence of GDP, inflation rate, unemployment rate and

interest rate on car sales in Malaysia. The findings show that all variables are statistically significant at their

respective levels. GDP has a positive coefficient, indicating that higher economic output is associated with

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increased car sales. Inflation rate, unemployment rate and interest rate all show negative coefficients, meaning

that increases in these indicators tend to reduce car sales. The significance levels, reflected by the p‑values,

confirm that the inflation rate is significant at the 1 per cent level, the interest rate is significant at the 5 percent

level and both GDP and unemployment rate are significant at the 10 percent level. The adjusted R² value of

0.3591 indicates that approximately 36 percent of the variation in car sales can be explained by the combined

effect of the four macroeconomic variables. Overall, the model suggests that economic conditions play an

important role in shaping national car sales in Malaysia.

Descriptive

Table 2. Descriptive Statistics of Dependent Variables and Independent Variables

Note: n=100. CS is car sales; GDP is gross domestic product; IR is the inflation rate; UR is the unemployment

rate and ITR represents the interest rate of Malaysia.

In Table 2, the average CS is 28.56%, which corresponds to an average return on assets of RM28.56 million.

GDP has a mean value of 3.12%, indicating stable economic performance in Malaysia from 1994 to 2022. The

average IR is 2.38%, reflecting a low inflation environment during the 6 years within the study range. The UR

shows an average of 1.85%, suggesting consistently low unemployment levels. The minimum CS recorded is

120180, while the maximum is 423452. The lowest and highest ITR values are -3.9% and 11.8%, respectively,

showing that fluctuations in interest rates may impact consumer demand for car purchases.

Pearson Correlation

Pearson correlation analysis helps researchers determine the strength and direction of the relationship between

two continuous variables. It is commonly used in fields such as psychology, social sciences, economics and

finance to identify associations, evaluate the intensity of relationships and observe potential patterns or trends in

the data. This method also provides useful insight into whether one variable may have predictive value for

another.

Table 3. Pearson Correlation Matrix

Note: n=100. CS is car sales; GDP is gross domestic product; IR is inflation rate; UR is unemployment rate and

ITR represents the interest rate of Malaysia. ***, **, * indicate that the estimated levels are statistically significant

at the 1%, 5% and 10% respectively.

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The Pearson correlation matrix for the variables in the car sales (CS) model is presented in Table 3. At the 1%

statistical significance level, CS shows significant relationships with GDP, IR, UR and ITR. GDP and IR

demonstrate a positive correlation with CS (r = 0.08, p < 0.05). CS is negatively correlated with UR and ITR (r =

-0.22 and r = -0.19, p < 0.05), while the correlation between CS and IR is also negative (r = -0.40, p < 0.10).

Based on the Pearson correlation guidelines, r values within the range of ±0.30 to ±0.70 indicate moderate

relationships. Therefore, the results show no indication of multicollinearity among the variables, consistent with

the criteria outlined by Pallant (2007).

Skewness and Kurtosis

Table 4. Skewness and Kurtosis Value

Note: n=100. CS is car sales; GDP is gross domestic product; IR is inflation rate; UR is unemployment rate and

ITR represents the interest rate of Malaysia.

Table 4 shows that the Kurtosis values fall between 2.466017 and 4.349006, while the Skewness values range

from -1.177425 to 0.1852359. Because both Skewness and Kurtosis fall within the acceptable limits of ±1 and

±5 respectively, the results indicate that the dataset satisfies the assumptions of normal distribution.

Table 5. Results of Hypotheses Testing

CONCLUSION

In conclusion, this study demonstrates that macroeconomic indicators play a significant role in influencing the

number of car sales in Malaysia. The findings show that GDP contributes positively to vehicle purchases, while

inflation rate, unemployment rate and interest rate negatively affect consumer demand. These results highlight

the importance of broader economic conditions in shaping purchasing behaviour in the automotive market. The

insights gained from this study offer valuable guidance for policymakers, automotive manufacturers and financial

institutions in developing strategies that align with economic trends and consumer responsiveness.

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While the findings contribute meaningfully to understanding car sales patterns in Malaysia, several limitations

should be acknowledged. The study relies on secondary data and focuses primarily on national car manufacturers

over a specific time period, which may restrict the generalizability of the results. Certain data were difficult to

obtain or required extensive manual calculation, potentially affecting accuracy. Future research could address

these limitations by including a larger sample of car brands, incorporating both local and international

manufacturers, and expanding the timeframe. Additionally, adopting mixed‑method approaches, such as

interviews or case studies, may provide deeper insights into consumer motivations and industry dynamics.

Overall, this research achieves its objective of examining how GDP, inflation, unemployment and interest rates

influence car sales in Malaysia. The findings offer both theoretical and practical contributions by reinforcing

established economic relationships and providing strategic implications for industry stakeholders. By

understanding how macroeconomic conditions shape consumer purchasing behaviour, automotive companies and

policymakers can better anticipate market shifts, refine decision‑making and enhance long‑term competitiveness

in Malaysia’s automotive sector.

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