Local automotive manufacturers need to grow up

Pet projects gone awry

It’s time we acknowledge that local automotive manufacturers will not make any serious headway if we continue to give them special treatment.


It is ironic that consumers in arguably the largest car market in Asean pay through their nose when they buy cars.

It is ridiculous to the extreme. Why do I say that?

Cars here get slapped with nothing short of humungous taxes and duties, the bulk of which are passed on to consumers.

In effect, when you buy a car on credit, as most Malaysians do, you are taking a loan, a large portion of which goes towards paying the taxes and duties concerned.

Let me repeat that – you take a large loan to pay taxes. And you pay interest on that loan.

And why do we have to do this? The interests (no pun intended) of some local car and car parts manufacturers come to mind.

So I sat up and took notice when International Trade and Industry Minister Tan Sri Muhyiddin Yassin said the National Automotive Police (NAP) needed fixing.

“The NAP is slanted towards protecting the local industry. This, of course, would not be good for the automotive industry as a whole,” he said. Muhyiddin said the restrictive policy had also caused some missed opportunities for Malaysia, and that while it was necessary to give some recognition to develop national cars, it should not be at the expense of the whole industry.

It’s what many of us have known all along, but here is a high-ranking Minister who says it clearly.

And did you know that component costs under Proton’s vendor system are “50% higher than in Japan”?

Muhyiddin said “that sounds a bit odd to me as we know Japan is an expensive cost centre”.

Yes, let’s review the NAP. And let’s also look at the big picture.

In this era of economic hardship, any move that would ease consumer burden would be more than welcomed.

We know that car loan repayments account for a large chunk of disposable income. If we make large cuts on the taxes and duties levied on cars, their prices would come down appreciably.

Consumers would need to set aside a smaller amount of their incomes to pay for their car purchases. They would have more money to spend on other things, like food and fuel.

And speaking of fuel, the price of oil doesn’t look like it’s headed anywhere but north.

Some analysts estimate that the savings in subsidies from the recent fuel price hike have been wiped out by the subsequent increase in crude oil prices. (See StarBiz, July 15).

We are practically back to square one.

The Government has promised not to raise fuel prices again this year, but that does not mean the need to do so does not exist.

One analyst suggested that if the Government were to go ahead with the hugely unpopular decision of raising fuel prices again this year, then “the high taxes on cars should be reduced – it should be balanced on the other side of the equation”.

Makes sense to me.

It’s time we acknowledge that local automotive manufacturers will not make any serious headway if we continue to give them special treatment, which is detrimental to these very manufacturers themselves, the overall automotive industry and consumers in general.

Let’s get over our automotive “pet projects”, and get on with making decisions that have the welfare of Malaysians as the uppermost priority.

Read:

Proton, a cosseted carmaker, turning mediocre products

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Posted in kosong, proton, Uncategorized

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