State-controlled car-maker Proton Holdings was back in the red on Tuesday, blaming lower domestic sales for a first-quarter loss.

The firm also painted a dour outlook, warning of intense competition and saying that it needed to pay for promotions to drum up business, adding costs pressures, Reuters noted.

Investors had been expecting a tough quarter from Proton, according to the report.

Its loss of 58.7 million ringgit ($15.96 million) for the April-June period followed two quarters of profits. Only five months ago, it had said it wanted to increase revenues by 12.4% in 2006/07 by boosting both domestic and export sales.

Revenues fell by a third to 1.4 billion ringgit in the first quarter, outpacing a 27% fall in operating costs.

A year earlier, Proton had also made a first-quarter loss, of 12.4 million ringgit, Reuters said.

Proton aims through 2006/07 to boost its domestic market share to 45.8% from 41.4% in 2005/06 and to increase export sales to 8.6% of total revenue from 5.2%, the report added.

But it may have a tough time. The news agency noted that, in July, the Malaysian Automotive Association reversed an earlier forecast of growth for new vehicle sales, blaming weak used car prices and rising interest rates.