The new automotive policy — what does the future hold?

Automotive players are seeking govt’s support in creating incentives and a conducive business environment with a level playing field that could be the impetus for new technology


THE delays in introducing the revised National Automotive Policy (NAP) have reached to a point that not many, including some industry players, are even enthusiastic about it anymore.

Initially, it was supposed to be unveiled in the first quarter of 2019 (1Q19). It did not happen. As we now are coming to the end of 3Q19, nothing is yet announced on the new NAP.

In fact, the new automotive framework has not really been a subject of interest among the media of late.

Perhaps all the attention has been given to the third national car, with all the agencies and stakeholders working hard on devising the new NAP to suit the new project.

Nevertheless, at the rate everything is going at the moment. NAP 2019 might be revealed by the end of the year.

Let’s start from the very beginning…

The NAP was first introduced in 2006 to facilitate the required transformation and integration of the local automotive industry with regional and global networks within the increasingly competitive environment.

The policy was reviewed in 2009 before another revision was made in 2014, which emphasised on green initiatives and market expansion, with an ultimate objective to make Malaysia the regional energy-efficient vehicle (EEV) hub by 2020.

Carmakers have already given their input for NAP 2019, and now it is up to the government to evaluate and consider the feedback and choose all the right elements that could be part of the new automotive blueprint.

In general, automotive players are seeking the government’s support in creating incentives and a conducive business environment with a level playing field that could be the impetus for new technology.

As the waiting game continues with the NAP, the players could just perhaps initiate any business strategies now and adapt later according to the new blueprint.

After all, time is money and the net financial and non-financial costs might just be the same either before or after the new policy.

In the meantime, The Malaysian Reserve (TMR) highlights some of the elements that might be covered in the revised NAP. The clock is ticking and the future of mobility could come sooner than one might think.

Next-generation Vehicle
One of the objectives of the NAP 2019 is reportedly to develop a next-generation vehicle (NxGV) ecosystem with Malaysia becoming the regional hub for NxGV production.

Proton Holdings Bhd showing its technology on car safety at MAI Malaysia Autoshow. Some quarters in the industry are questioning the practicality of the NxGVs in the local marketplace

According to a consultative paper sighted by TMR, NxGV is defined as a vehicle with an EEV status and has achieved at least Level 3 automation, which is conditional automation.

Level 3 automation is when the car monitors the driving environment around it and becomes a co-pilot.

Simply put, the autonomous car does the driving on the condition that the human driver will respond appropriately to a request to intervene.

For instance, a Level 3 car is capable of seeing a slower-moving vehicle in front of it before deciding to overtake, with the human driver to intervene if things go wrong.

Some quarters in the industry are questioning the practicality of such advanced vehicles in the local marketplace.

One may argue that the plan is ambitious but yet necessary to move the local auto industry forward.

Separately, do not be surprised if provisions on air mobility, or “flying car” as many may call it, could be included in the NAP 2019.

This is a concept of integrating various types of transport services to centralised mobility services.

The rise of mobility-as-a-service (MaaS) will revolutionise how people move from point A to point B where services are connected to transportation.

In layman’s terms, MaaS leverages on the digital platform that integrates end-to-end trip planning, booking, payment services and solutions across all modes of transportation.

The easy examples would be Grab and GrabFood services. MaaS could potentially make the idea of owning a private car becomes obsolete.

Strong 5G networks is a must in connected mobility. As it is, Finnish capital Helsinki already aimed at eliminating the need for car ownership by 2025.

How Malaysia can develop MaaS would rely on the provisions of the new NAP.

Better-defined Incentives for EEVs
The absence of standardised incentives, interpretation differences and broad policies over EEVs have, to some extent, stuttered investments into one of the fastest-growing segments in the auto industry. The EEV programme forms a key component in the NAP 2014.

Proton’s compact MPV EEV, Ertiga. The current EEV has customised incentives that arguably made it difficult for OEMs to decide on investment

However, industry players have argued that there are different interpretations and specifications from various government agencies on what is considered as an EEV.

The current EEV has customised incentives that arguably made it difficult for original equipment manufacturers (OEMs) to decide on investment due to the uncertain incentives that they may receive.

Carmakers want greater clarity on EEVs under the new automotive policy.

Any debate on EEV incentives, however, would raise questions on the support given to national cars in that aspect, as certain parties have claimed that the programme has a certain element of preferential treatment.

As such, standardised incentives would ease the grouses.

More Attention to Commercial Vehicles
Industry players have argued that the past NAPs lacked focus on commercial vehicles (CVs) compared to passenger vehicles.

That might change this time around as more attention ought to be given to CVs.

The two top issues among CV manufacturers are the ubiquity of secondhand trucks in the local market and the prospect of higher fuel standards.

Certain parties had claimed that Malaysia is suffering from the importation of a huge number of used trucks, particularly from the Japanese brands.

In an interview with TMR, Volvo Trucks Malaysia MD Mitch Peden said the company’s internal study that was based on conversations between dealers a few years ago indicated that for every new heavy truck delivered in Malaysia, there are two used trucks sold. Used trucks may impact manufacturers’ volume.

Regardless, Peden said Volvo Trucks’ biggest concern is on safety issues.

As for the fuel issue, he said the company is looking forward to further conversions of the Euro 5 and Euro 6 diesel standards to allow the entry of an advanced range of trucks into Malaysia.

These days, more players have introduced vehicles that run on Euro 5, but the fuel is still not available in all petrol stations nationwide.

The Euro 5 fuel remains to be in the B7 formulation (a blend of 7% palm methyl ester and 93% petroleum diesel), despite the country having rolled out its B10 mandate for the transportation sector in February this year.

Singapore switched to the Euro 6 standards for petrol and diesel vehicles in September 2017 and January 2018 respectively. The day for Malaysia to adopt Euro 6 remains to be seen.

Overall, CVs desperately need more attention from the policymakers.

End-of-life Vehicle Policy
A strong political will is needed to introduce the end-of-life vehicle (ELV) policy.

The scrap car policy is deemed sensitive by the government, but the industry desires it to complete the ecosystem that would ensure sustainability and promote safety.

Transport Minister Anthony Loke said there is no plan yet to implement the ELV policy, neither it is being considered.

Strong 5G networks is a must in connected mobility

However, several elements that are set as the foundation of an ELV policy had been deliberated in the NAP 2019 consultative paper.

The paper, among others, discussed the need to promote voluntary vehicle inspection; an ELV ecosystem and remanufacturing activities; as well as to continue the rebuilt trucks transformation to remanufacturing.

The paper also listed cyber-security issues under the strategy on safety, environment and consumerism, apart from the enforcement of the 4R2S — the automotive recycling industry which is expected to reach a value of about RM2 billion by 2020.

The 4R2S system — repair, reuse, recycle, remanufacture, services and spare parts — has been a key part of the automotive sector.

Some sections of the society had rejected the scrapping policy, calling it unfair to owners who could not purchase new vehicles.

The ELV was first announced during the NAP 2006 roadmap. Three years later, the government introduced the mandatory annual inspections of all vehicles above 15 years old.

The ELV programme resurfaced in 2015 when the government and carmakers agreed to share an equal commitment of RM5,000 for every vehicle scrapped.

But the programme was discontinued due to public outcry.

Let’s see if the government is ready to test the waters about the ELV in the NAP 2019 with preliminary measures.