Scrapping incentives may be introduced to help auto market

Scrapping incentives may be introduced to help auto market

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Generally good for everyone, but classic car fans may have a gripe 

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Muhyiddin: Incentive to boost local car market

When the Malaysian Automotive Association announced that January sales had plunged 17.5 per cent, it certainly looked like the Malaysian car market is suffering more than expected.

Late last year many industry leaders who were polled said they expected the market to shrink between 10 and 15 per cent, while a few went so far as to predict a 20 percent shrink.

MAA’s figures may not be far off the mark but things are not likely to look up anytime soon as February numbers are expected to be dismal as well but for a different reason, it was a very short working month, with public holidays punctuating sales effort.

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GONE: Old, unsafe and environmentally unfriendly cars can be taken off the road and crushed 

International Trade and Industry Minister, Tan Sri Muhyiddin Yassin suggested a blanket RM5,000 incentive for owners of cars that have been on the road 15 years or more.

While details of the proposed scrapping mechanism is yet to be properly explained, it is expected to run along similar veins of systems already in place in countries such as Japan and Singapore.

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BOOSTER: Taking old cars off the road gives room for growth in the Malaysian automotive indsutry 

It is expected to work like this; Upon purchase of a new car, the Government will give owners a rebate of RM5,000 for the old car that they hand over and the money is expected to help them with the price of a new car.

While the RM5,000 will help boost new car sales, it is also possible to use the mechanism to reduce the number of smoking and unsafe jalopies from our roads.

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CLASSIC GRIEF: Enthusiasts may find old cars and their cheap source of cannibalised parts disappearing

However classic car enthusiasts may be affected by this ruling as old cars which used to be an inexpensive source of parts may begin disappearing.

I say it is OK as long as the Government does not ban old cars from our roads, the incentive of RM5,000 is probably set just about right to encourage owners to get rid of really old, dirty and unsafe cars which typically change hands at these price range.

I suspect the incentive may also have an effect of used car prices, as cars exceed the 10-year limit, they may start losing their charm very quickly as owners realsie they have a bankable value with their car and not bother to put it up for sale, preferring instead to just send it to the graveyard.

Funnily enough I think that the majority of Malaysians will have RM5,000 as the baseline value for all mass market cars as they reach 15 years of age.

The incentive system will drag down used prices of mass market models appraoching a certain age but may help better quality cars to maintain their value with owners knowing that they have a RM5,000 safety net, in case they change their mind.

9 COMMENTS

  1. It is the AP system,unfair policies that is killing the auto industry.We are being buried to death by a 7-9 year loan just to buy a car that cannot last 7-9 years of usage.Who in the right mind would want to buy a car for the price we paid is not in accordance with the market due to the add in of AP cost.There is no need for incentives to boost car sales to make the roads more crowded,increasing pollution.Give us a public transport that is comparable with Singapore and I would gladly sell of my car.Money could be better use for other purposes.If really want to boost car sales,just remove the AP system and open the market,consumers will be back.

  2. Why not the Government scrap the duties and taxes that make Malaysian cars the most expensive in the world? With a population that has very low earning power (per capita income), isn’t it a stupid policy? In Singapore cars are expensive because the per capita income is roughly 5 times that of Malaysia, so in effect for Singaporeans, cars are NOT expensive, even with the cost of the CoE! Proton should be able to stand on it’s own, not be “force fed” on us through high taxes and duties on imported cars. It’s a real dumb ass policy that in the long run will ruin everyone. Mahatir’s baby has already grown up, however deformed, time to leave home and fend for itself!

  3. JQ, taking away the AP will not bring down car prices because a dramatic reduction in car prices will kill second hand value and car companies work too hard to preserve used car values to just give it all away

    if you don’t believe me look at how little Japanese car prices moved even after we signed the Japan -Malaysia FTA, car companie swill just enjoy the larger margin and maintain their used car prices, tis a win-win for them, but of course it is a lose-lose for us buyers

    I agree that the best way forward is to spend more money on public transportation and encourage the use of clean technology on cars, even if it means paying more for them

  4. Kaylcar, the Government doesn’t really care about making cars affordable to as many people as possible, mass mobilisation was achieved thru motorcycles,

    They are so used to the income from car taxes that they will never give it up.

    My only wish is that the income they make from cars would be ploughed back into public transport or clean energy for the future

  5. WOW, i like your blog theme, content is very interesting, bookmarked, regards

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