Five foreign carmakers are keen to assemble and manufacture cars in Malaysia, Southeast Asia's largest passenger car market, a senior minister said on Monday.

Trade minister Mustapa Mohamed said the government was reviewing applications from the European and Asian carmakers, adding that a decision would be made by the end of the year, but did not elaborate. He refused to name the firms, news agency AFP noted.

"This is an important industry. I would like to see more investments," he told reporters after launching the first Chevrolet cars service centre run by Naza, the Peugeot and Kia importer and assembler in Malaysia.

"Hopefully, one day these (Chevrolet) cars can be manufactured here," Mustapa added. Chevrolets are imported from Thailand.

Auto sales in Malaysia are expected to hit new highs this year, with the Malaysian Automotive Association (MAA) in July revising its 2010 sales forecast up to 570,000 units, from earlier estimates of 550,000. The MAA said it was optimistic the industry would break an record of 552,316 units sold in 2005.

The steady growth in car sales has already spurred PSA Peugeot Citroen, Toyota and Volkswagen to move assembly of pricier cars to Malaysia.

Mustapa said the five foreign players are being encouraged to produce cars with engine capacity of 1800cc and above, using the under-utilised capacity of local automakers.

"Malaysia has a capacity to produce 1m cars per year but production is 500,000. The industry is working at 50% capacity only," he said.