Malaysia’s new car sales fell 11% last year because of tougher loan conditions and weak resale value, but the worst is over and sales are expected to bounce back this year, an industry group was reported to have said on Thursday.

National car maker Proton was the biggest loser as its share of southeast Asia’s largest passenger car market shrank to around a third last year, statistics showed, according to The Associated Press (AP).

Overall sales in 2006 fell to 490,768 units from a record high of 552,316 units in 2005, the news agency said, citing a Malaysian Automotive Association report. But the trade body predicted sales to rebound and grow by 1.9% this year to a half million vehicles.

The 2006 sales figure fell short of the association’s forecast of 520,000 units as higher interest rates, stringent rules for loan approvals and shorter repayment period made financing a problem while a hike in retail fuel prices last year dampened sales, the report said, according to AP.

AP said Malaysia remained the region’s biggest passenger car market with sales of 366,738 cars last year while Proton, which a decade ago made two-thirds of all cars sold in Malaysia, lost its market leadership for the first time to domestic rival Perodua.

Proton’s share of Malaysia’s passenger car market slid to 32% last year, from 40% in 2005, as sales deteriorated by 30% on-year to 115,538 units in 2006, AP added.

Perodua – which specialises in making compact cars and is partly owned by Japanese minicar maker Daihatsu Motor – reportedly boosted sales 14% year-on-year to 152,733 units in 2006 to raise its market share to 42%, up from 32% in 2005.

Sales of foreign cars recorded a slight drop, occupying 22% of the passenger car market, down from 23% in 2005, the Associated Press said. Toyota led sales to capture 8% of the market followed closely by Honda with 7%.