Edaran Otomobil Nasional Bhd (EON), the biggest Malaysian dealer of Proton vehicles, said on Friday that poor demand has forced it to close 16% of its sales and service branches.

According to Reuters, Edaran said it planned to close 10 sales and four service branches from 1 September. After then, EON said it would still have 42 sales and 33 service branches, enough to meet the needs of Proton customers.

"The move is a result of the weaker sentiment for the passenger car market that has seen a downtrend in recent months," Edaran reportedly told the stock exchange.

The news agency noted that, the Malaysian Automotive Association last month forecast a 6% drop in new car sales in 2006, reversing an earlier forecast of growth, blaming weak used car prices and rising interest rates for the first fall in eight years.

Proton, dogged by a host of problems such as concerns over build quality, slow model roll-out and its failure to find a foreign partner to help technology and vehicle development, has seen its share of the Malaysian passenger car market fall to 33% from 38% a year ago, the association said, according to Reuters.