Plan for 20% to 30% car price cut is right, says expert

KUALA LUMPUR: The Government's plan to reduce car prices gradually by between 20% and 30% within the next five years is the best mechanism for consumers and the automotive industry without disrupting the ecosystem, said an industry expert.

“Five years is the right timing to reduce car prices because a sudden reduction would impact the second-hand car industry,” Malaysia Automotive Institute chief executive officer Madani Sahari said.

He said although the car price cut plan had recently received wide publicity, the exercise itself started last year with some popular car brands reducing their car prices by 2% to 5%.

“The Government has had the car price reduction plan in the yet-to-be-announced National Automotive Policy since 2011 and had started to implement it since last year in a silent way,” he said on the sidelines of a forum on “Business Time Insight The National Automotive Policy” here yesterday.

On Tuesday, Prime Minister Datuk Seri Najib Tun Razak reiterated the Government's commitment to gradually reduce car prices by 20% to 30% within the next five years.

Madani said the car price reduction did not involve a cut in the excise duties, as Malaysian companies in reality were only paying about 40% of excise duties, even though it hovered at around 65%-105%, depending on the segment, due to value-added activities undertaken in the country.

“Completely-knocked-down (CKD) cars which are assembled in Malaysia basically have value-added activities, and are therefore receiving the privilege of lower excise duties. 

“Based on our calculations, most of our CKD cars enjoy excise duties in the range of 40%,” he said. Meanwhile, Volkswagen Group Malaysia managing director Dr Zeno Kerschbaumer said the car price reduction policy showed the Government's effort to put consumers into the focus of their attention.

“This perfectly matches our (Volkswagen's) policy to continuously bring the latest technology to customers at the best price possible. I think it's a big message to consumers and gives them the confidence that the Government was giving the consumers interest in the focus of their policy,” he said.

He said the move was also in line with the principle that the customers had to drive the policy. “We need to leave all our options to the customers, and the customers in the end need to decide what better fits their requirements,” he said. - Bernama

(Source: The Star Online)