LAST_UPDATESun, 27 May 2018 11am

National Automotive Policy 2014: Car Prices Reduced

/Berita Harian/Berita HarianKUALA LUMPUR: By 2018, the National Automotive Policy (DAN) 2014 that was announced today is expected to include a price reduction between 20 to 30 percent for locally assembled cars (CKD).

For a more competitive price, the government will take the approach of providing incentives to encourage automotive companies in setting up installation factories in the country.

According to sources, the cars' price reduction is consistent with the government's agenda mentioned in Barisan Nasional's Manifesto at the 13th General Election.

DAN's revisions that is long awaited by the industry's participants, investors and consumers, outlines various measures and incentives to make the country's automotive industry more competitive, to encourage greater investment and stimulate the development of new technologies.

The policy also aims to increase the continuous participation of Bumiputera, raising the safety standards and make the car prices more affordable.

Consider Consumers' Problems 

NAP 2014's main focus is to address issues related to users, participants and the general problems in the automotive industry.

In terms of industry, the main issue is the use of technology which is still low among vendors, low export, import permits (AP) and unskilled foreign workers.

In terms of users, we know their complaints about high prices. According to a participant, among the general issues are low fuel standards, safety factors the effect on the environment.

On the price reduction, some locally assembled car manufacturers have reduced the price in stages.

Among them are Honda Jazz (reduced to 17 percent), Nissan Sentra (13 percent), Proton Saga (12 percent) and Perodua Alza (12 percent).

In the meantime, the government has initiated efforts to reduce the rate of excise duty under the Industrial Linkage Programme (ILP).

Through the program, vehicle parts manufacturers from Malaysia and ASEAN countries may apply for a tax rebate, thus helping to reduce the selling price.

Currently, the import duty is 30 percent, while excise duty is ranged from 65 to 125 percent.

The implementation of Goods and Services Tax (GST) starting April next year is expected to help reduce the price of vehicles in the country.

According to studies, the GST will also help reduce the price of cars because the sales tax is currently at 10 percent, while GST is only at six percent.

Attract FDI

Meanwhile, local automotive analysts argue that the government is expected to announce various measures and incentives to attract foreign direct investment (FDI), especially in the Energy Efficient Vehicles (EEV) productions segment.

The move is seen as having a significant economic multiplier effect in increasing competitiveness, providing business opportunities to automotive companies and vendors, technology transfer and innovation and create more high-skilled jobs.

In order to achieve the objective of making Malaysia as the regional hub for EEV vehicles, the government is expected to open 

Manufacturing License (ML) applications to foreign automotive companies in an effort to encourage local car manufacturers in this segment.

Offer EEV License

The government is expected to open EEV production license as a whole.

The license will only be given to car installations with an engine capacity of not less than 1800cc and the price should be more than RM150, 000 per unit, according to sources.

However, he did not expect such a move would have a negative impact for the national carmaker Proton Holdings Bhd as it is a different car segment which involves high-tech engine system with a more expensive price category.

The NAP 2014 is also expected to address vehicles' inspection policy that are extended to private vehicles compared to commercial vehicles.

However, analysts generally do not expect the government to enforce the vehicle disposal policy.

If implemented, the government had to pay RM5, 000 cash coupon to consumers who dispose the vehicle.

Based on the current governments's fiscal position, the policy will not be implemented anytime soon, he said.



- Translated from Berita Harian