Govt foresees hardship in achieving car price depletion

By P PREM KUMAR & DASHVEENJIT KAUR / Pic By ISMAIL CHE RUS

The government is facing challenges in reaching its aim to reduce car prices by 30% in five years via the National Automotive Policy (NAP) introduced in January 2014.

Deputy International Trade and Industry Minister Datuk Seri Ahmad Maslan (picture) said car prices have only experienced an average reduction of 16.38% between 2013 and 2018.

In 2017 alone, the overall car prices dropped by 0.52%, Ahmad told the Dewan Negara yesterday.

He was responding to Senator Datuk Yong Wui Chung, who asked the government to state whether the 30% price reduction target promised five years ago have been fulfiled.

“Car prices increased by 2.13% in 2016, following the fall of the ringgit value which caused original equipment manufacturers to raise car prices,” said Ahmad.

During the 13th General Election, the government under its manifesto, pledged a 30% gradual drop in car prices which would be done in stages through the NAP.

Ahmad said among the challenges faced by the government in achieving its target were issues that go beyond the government’s control such as foreign currency appreciation, market volatility, as well as the price of imported and local completely knocked-down components.

“The price of a car is set by production companies and vehicle manufacturers based on the factors stated and not the government,” he said.

According to Ahmad, the electronic control unit (ECU) is the priciest component of a car — which is a component equivalent to a computer’s motherboard.

“The cost of an ECU is difficult to control, especially when it involves foreign exchange,” he said.

Ahmad said through the NAP implementation in 2014, the government has offered customised incentives including tax deductions and exemptions to encourage the production of energy-efficient vehicles and the implementation of local value-added activities.

According to him, car models that have been marked down gradually between 2013-2017 include the Proton Exora (a decrease of 4.7%); Perodua Alza (-11.3%) Perodua Myvi (-19.4%); Honda Jazz (-19.3%); Mazda CX-5 (-6.6%); and Perodua Axia (-19.7%).

Ahmad said, priced at RM24,999, the Perodua Axia emerged as the cheapest car model in the country.

“Previously, there was never such a car being priced that low that ever met the international safety specifications,” he added.

The Goods and Services Tax (GST) imposed since April 1, 2015, has positively affected carmakers — namely Proton, Honda and Toyota — which announced price reductions ranging from RM500 to RM4,000.

Ahmad reckoned that due to the abolishment of the 10% Sales and Services Tax — which was replaced by the 6% GST — other manufactures such as Nissan, Mercedes, Perodua, Hyundai and Ford also announced a drop in price of up to 2.87%.