Unreasonably high car prices in Malaysia...

Buying a car in China, the old fashioned way:

Someone forwarded an article by a Syed Akbar Ali, who must be really upset about our unreasonably high car prices. I know cars are much cheaper in UK, USA and Australia but his figures show even more so than I thought! Though he has the point about the high car prices, I think he has oversimplified the argument. Eg. the use of 26 million people in the population as all car purchasers. Then he has overlooked the aspect of the loss of revenues from import duties and excise duties which had to be removed to enable low car prices. Despite leakages and so on, I am sure such revenues form a large part of our government income to finance certain development expenditures. Besides the people working for Proton and component suppliers, we have seen how continual recent reductions in car prices had badly affected resale values of used cars which caused hardships to those who are unable to repay the balance of their loans if they were to terminate prematurely the hire purchase agreement.

A sudden removal of duties would be chaotic. Just imagine if you were the purchaser of a Toyota Camry which costed Rm170,000 and within a few months, the government decided to remove all duties and the price came down to Rm70,000, how would you feel then?

Subject: Car Prices In Malaysia 3x higher
Date: Tuesday, 21 July, 2009, 8:47 AM

BMW 535i sells for RM178,000 in the US
In the United States of America (a developed country which we are also aspiring to become by the year 2020) a 2009 model BMW 535i Sedan is selling for about USD50,367.00. This is only RM178,000 – about the price of a Toyota Camry 2.4L here in Malaysia . The same BMW sells in Malaysia for about RM450,000.

BMW 328i sells for RM155,000 in the US
The 2009 model BMW 328i 2 door Convertible sells for USD44,014 or RM155,369.00 in the US . In Malaysia the same car sells for over RM460,000. This is an untenable situation.

Audi A4 2.0T Cabriolet Convertible sells for RM142,000 in the US
The 2009 model Audi A4 2 Door 2.0T Cabriolet Convertible sells in the US for USD40,328.00 or RM142,357. In Malaysia the same car would sell for about RM265,000.

VW GTI 2.0T sells for RM85,000 in the US
In the US the 2009 model Volkswagen GTI 2.0T sells for USD 24,039 or RM85,000 only. In China the same car will cost around RM60,000. Over here the same VW car sells for about RM200,000.

And the 2010 model Toyota Camry 2.4L sells in the US for USD 19,659.00 or RM69,396. In Malaysia the 2008 Toyota Camry 2.4L sells for RM170,000. Toyota Camry 2.4L, 2010 model. RM69,000 in the US

Car prices in Malaysia are about three times higher than the prices in the United States . We are a developing nation. Our land and labour costs are so much cheaper than the US . Why are our cars so expensive? It does not make any sense. Tak masuk akal.

Then here are some car prices from our neighbour Indonesia. The Toyota Altis sells in Indonesia for about RM46,000. The same car sells here for around RM 112,000. Again we are three times more expensive than Indonesia .

The Honda Jazz sells here for RM108,000. In Indonesia the Jazz sells for RM 36,000. Three times more expensive.

We are paying ridiculously high prices (and actually impoverishing the Malays – who are the largest buyers of cars in Malaysia) to support an out of date, out of touch with reality motor car policy.

We are paying the highest car prices in the world to support the Proton and other locally made cars as well as support a mind boggling AP policy which only benefits a relatively few rich Malays. A disproportionately large number of Malays and other Malaysians are being impoverished to subsidize the wealth of a few inefficient rich. You should know who are we talking about?

26 million Malaysians have to pay three times more for their cars just to support Proton and 120,000 people who are directly and indirectly involved in the motor sector in Malaysia and the AP holders. That is a ratio of 216:1.This ratio of 216:1 is too skewed. 26.0 million happier people can contribute many more votes than 120,000 members of an inefficient motor industry. 26 million unhappy people can change a Government.(The maths is not really difficult here)

And this outdated policy is impoverishing the Malays more than anyone else.

Here is some news from our DPM Tan Sri Muhyudin Yassin about our car policy:

Muhyiddin assures govt support for automotive parts and component sector

1. KUALA LUMPUR , May 26 — The deputy prime minister said special focus will be given to “facilitate and encourage” the development of the automotive parts and component sector despite the current global and regional economic downturn.
2. “Under the CEPT and Asean Trade in Goods Agreements, Malaysia has agreed to eliminate import duties on all products in the Normal Track on January 1, 2010. This includes motor vehicles, auto parts and components,” he said.
3. He pointed out that . . . “the motor vehicle sub sector in Malaysia will not be directly impacted because of its heavy dependence on the domestic market”.
4. “The Malaysian government recognizes the contribution of the domestic automotive industry towards the development of the country.”

Para 2 sounds promising but then Para 3 and 4 basically says that the Malaysian motor car industry will continue to be protected. This means we will continue paying the highest car prices in the world for such “sucks & non safety standard” automobiles.
Cuba kita kira : kalau kereta Honda Jazz di jual dengan harga yang sebenarnya (lebih kurang RM36,000 saja) dan bukan pada harga sekarang (RM108,000) maksudnya bayaran bulanan pembeli kereta akan jadi kurang, mungkin sepertiga sahaja daripada bayaran bulanan sekarang..
Jika sekarang orang bayar RM1,500 sebulan untuk beli Honda Jazz, kalau harga kereta lebih menepati harga pasaran dunia, orang kita perlu bayar sekitar RM500 saja sebulan.Maksudnya tanpa Kerajaan perlu membuat apa pun (merangsang ekonomi, belanja berpuluh billion Ringgit duit rakyat) sebagainya) setiap rakyat Malaysia yang membeli kereta yang seharga dengan Honda Jazz akan dapat menjimatkan sehingga RM1,000sebulan daripada kos sara hidup bulanannya.

This is like giving the car buyer an RM1000 pay rise without incurring any extra costs for the taxpayer, the Government or the economy. It will greatly reduce the cost of living in Malaysia and spur greater economic growth too.

Tapi sekarang, yang menjadi mangsa dulu dan yang menjadi miskin dulu orang Melayu juga. Orang Melayu yang paling ramai sekali menjadi pembeli kereta dalam negara kita. Orang Melayu kebanyakannya makan gaji – tiap bulan dapat gaji tetap. Bila harga kereta naik gila, yang menjadi miskin di saf depan sekali adalah orang Melayu juga.

In absolute numbers, the Malays are suffering the most because they are the most in number among the fixed income people who also buy cars.

Some folks said the other day that Proton has 150 major component suppliers, dealers, distributors and about 500 other parts suppliers too. Of the 150 major component suppliers, about 15 of them are listed companies. In total they employ about 120,000 people. The Proton supply chain is a mix of bumiputras and non bumiputras. But here is a sad fact : none of them are operating at their level best efficiency.

Our motor car policy is forcing Malaysians to subsidize Proton so that Proton can sustain major inefficiencies in the Malaysian economy. This is not a good thing at all.We have to unwind this situation. Set a target of 18 months from now to unwind all protection for our motor industry. Remove the impoverishing AP policy also in 18 months. Let Malaysian car prices reflect world market prices for the same makes of cars.If a BMW 535 sells for RM178,000 in America , it should sell for a little less here in Malaysia (our rentals and salaries are cheaper).

The Ministers continue making pronouncements about the car industry as though nothing has happened. I hope everyone will please wake up. The Government has a real chance of getting thrown out of office in about three years. The people will not accept inept answers anymore.

The ridiculous car prices in Malaysia is an issue that is just beginning to get more attention and publicity. It is going to become a really big issue in the near future. Be forewarned.

Syed Akbar Ali
Link