Five-year gradual reduction of car prices
National news agency Bernama has recently quoted International Trade and Industry Minister Datuk Seri Mustapa Mohamed as confirming that car prices in Malaysia will be gradually reduced over the next five years ultimately leading to cars being 20-30% cheaper than they currently are by 2017.
Prices of motor vehicles in the country have been a great sources of discontent and dissatisfaction amongst Malaysians, and in the recent 13th General Elections, both political parties promised lower car prices in their respective manifestos. The situation resulted in horrible sales drops for many players across the industry as buyers withheld their purchasing decision in anticipation of lower prices.
Because the automotive industry is a large ecosystem with many stake holders, sudden reduction in prizes would not have been possible, and if bulldozed through would have resulted in huge amounts of collateral damage in the form of plummeting resale value and huge losses particularly for second hand dealers and owners that still owe huge sums of money to their finance companies.
Bernama’s quoted Mustapa as saying that the price reduction exercise should be done in an orderly manner so as not to affect the industry’s growth and existing jobs in the automotive and related industries.
“As such, we have had discussions with automotive manufacturers and they are aware of ongoing negotiations to conclude a free trade agreement which would be implemented soon,” he said.
Mustapa’s statement has found backing from Perodua, a company which one can argue has benefited most handsomely from the current tax regime. In a statement released by the company yesterday, Perodua President & CEO, Datuk Aminar Rashid Salleh said announced that Perodua is in full support of the government’s announcement.
“In fact we have been engaged with the government, through MITI and MAI (Malaysia Automotive Institute) over the last 2 years in giving our inputs for the revision of the NAP which we understand will be announced in due course,” Perodua President & CEO, Datuk Aminar Rashid Salleh said.
Aminar said that the gradual reduction would allow the automotive eco-system, which includes manufacturers, vendors, authorised dealers, the used car market, consumers and other stakeholders, much needed time to adjust.
“As one of the largest local carmakers, Perodua sees great value in a gradual liberalisation and this will also help us in being prepared for when the market fully opens,” Aminar said.
Perodua’s statement further states that the company has directly and indirectly through its business partners provided job opportunities to some 70,000 people throughout its entire eco-system. Currently, some 109 local vendors supply a variety of parts to Perodua and its cars, spare parts, and services are distributed in the country through 272 local sales as well as service dealers and other service providers.
