New NAP to promote exports

Focus is expected to be tilted to the development and production of energy-efficient, next-generation vehicles and new national car project

pic by TMR FILE

THE new National Automotive Policy (NAP) is expected to be released in September. According to early reports and forums held, the new policy’s focus is expected to be tilted to the development and production of energy-efficient, next-generation vehicles with increased level of automation and some policy measures in favour of the new national car project.

As a consumer, you would hope the third NAP will result in us getting higher quality cars for cheaper prices like in advanced countries.

I would like to see the day when you could walk into a car dealership in the country and pay below RM20k for a brand new, good quality make much like in a buyer does in the US or the UK, though it would be wishful thinking that prices will drop to that level.

No doubt the new policy, as in the earlier versions, will state the importance of safeguarding the interests of consumers in terms of value for money, safety and quality of products and services. But you can’t help but feel such aspirations are never really going to be the thrust of this multibillion ringgit industry.

And unfortunately, when you have a new national project on the drawing board like we have now, it would very likely mean some level of protection to the newcomer at the expense of taxpayers.

We wish the best to the new carmaker and take heart that succeed or fail, the market has a way of ensuring the best survive at the benefit of consumers.

From a business perspective, the NAP 3 must take the opportunity to build on the successes and failures of the previous two policies.

Since the line between national and foreign carmakers is closer than ever, the new policy initiative must consider how best to help companies like Volvo Cars, Mazda Motor Corp, Peugeot, Geely Auto Group, Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) make Malaysia a manufacturing hub for SUVs or energy-efficient vehicles (EEVs), and the ability to export into regional markets with low motorisation rates like Indonesia, the Philippines and Vietnam as was intended in the original NAP.

The local market is just too small for all carmakers. The companies mentioned already have the intent, financial resources, models and manufacturing capacity. All that is needed is the scale and supply chains to make their exports more price competitive.

NAP 1 was launched in 2006 with the aim of generating sustainable economic value creation and was weighed in favour of improving the capabilities of local automakers like Proton and Perodua, besides turning the country into a regional manufacturing hub for both local and export markets.

The objectives were generally not achieved as Proton struggled with many issues, while global brands moved to Thailand which became the regional auto hub.

Exports never really took off with the exception of a small number of auto part makers who became suppliers to major makes in the regional market.

Consumers continued to pay high prices for cars as a result, but it paved the road for major changes in the years ahead.

NAP 2, launched in 2014, then sought to develop a more competitive auto industry and promote Malaysia as an EEV manufacturing hub.

The incentives offered by the government saw automakers launching EEVs and various hybrids, enjoying huge tax exemptions.

Fuel consumption improved and those with some money got some bargains for high-end makes.

There’s talk the new NAP will push for B20 biodiesel fuel adoption by 2025 and B30 by 2030. Trying to push another industry’s demand supply problem to the automotive sector is probably not a very good policy.

Auto sales in Malaysia looked to have peaked at about 600,000 units annually, despite various marketing promotions by dealers.

The question of affordability, household debts, withdrawal of fuel subsidies, the growth of ride hailing services and moves to promote other modes of transport would also suggest the car market is facing some uncertainties. Growth now would come from exports.

As a consumer, NAP or not, the higher technological content in cars these days will likely mean we have to live with high priced cars and after sales service charges, unless import taxes are removed.

Bhupinder Singh is the corporate desk editor of The Malaysian Reserve.