Low Car Prices = High Income Nation

I received the following in an e mail. I have written the same things years ago. I believe my posting even had pictures. Here is a quick read:

These are US car prices with US duty and import tax paid, which are just like Malaysian car prices with duty and tax also paid, but here, you will see, they are much lower and less exorbitant than in Malaysia.

Bear in mind all cars are CBU (complete built up) Japan, CBU South Korea or CBU Germany.

The following cars we get here are CKD (complete knocked down) cars with more than 50 percent Malaysian content and "supposedly" are cheaper due to their being CKD and supporting Malaysian manufacturers.

I cannot understand, we support our own Malaysian manufacturers and "Beli barang buatan Malaysia" (buy local), and yet the prices can be higher than "Barang buatan Jepun" or Jerman which is usually higher in quality.

And yet, to make matters worse, the US GDP per capita is higher than Malaysia and the average American earns five times more than the average Malaysian.

Mainstream car prices (comparison between US and Malaysia)

                                      In US                         In Malaysia

Honda Accord       US$21,480 (RM64,440)         RM150,000

Honda CRV          US$22,495 (RM67,485)         RM150,000

Honda Civic          US$15,955 (RM47,865)         RM115,000

Toyota Altis            US$16,130 (RM48,390)         RM112,000

Toyota Camry        US$22,055 (RM66,165)         RM180,000

Kia Sorento            US$23,150 (RM69,450)         RM160,000

Hyundai Tucson      US$19,245 (RM57,735)         RM140,000

Hyundai Sonata      US$20,895 (RM62,685)         RM150,000

Hyundai Elantra      US$16,695 (RM50,085)         RM98,000

Luxury car prices

BMW 328i              US$36,500 (RM109,500)         RM300,000

BMW 528i              US$46,900 (RM149,000)         RM400,000

BMW 535i              US$52,500 (RM157,000)         RM600,000

BMW X5                US$47,500 (RM142,500)         RM580,000

Mercedes E350      US$51,000 (RM153,000)         RM400,000 (CKD E250)

Jaguar XF              US$53,000 (RM159,000)         RM500,000

Jaguar XJ              US$73,700 (RM221,000)         RM1,000,000

Porsche Cayenne   US$48,850 (RM146,000)         RM570,000

Most Malaysians pay close to 50 percent of their salary for their monthly payments for their cars.  Not only do the banks get an easy ride (cause everybody is "forced" to take loans), we have to live in debt for over seven years, depriving our family of better food and clothes."

The writer has a solid point about 'Belilah Barang Buatan Malaysia' which has been part of the Government's campaign for many, many years. There is even a 'Belilah Barang Buatan Malaysia' logo. Here it is :

And if I remember correct the suggestion to "Beli Barang Buatan Malaysia" was once incorporated as part of the fight against inflation - because logically "Made in Malaysia" should be cheaper. But as the car price list above shows, we are paying two to three times the prices of cars than the Americans.

For your information, just after Dato Seri Najib became the Prime Minister he met with a few of us Bloggers at his house. Among the things I raised with him was the very high prices of cars in Malaysia. It surely struck the PM's ear. He listened but did not say anything.

And the last time I wrote about this, as one comment said the "tak tahu niaga tak tahu kira" folks came in with all sorts of really mind boggling comments saying that car prices in Malaysia were actually cheap. Some even said that if car prices became cheaper, then even the 'kerani' will be driving Honda Accord. This is the feudalistic mind that still controls peoples' minds. What is wrong if the 'kerani' drive Honda Accord? If the "kerani" can drive Honda Accord then the "pegawai" can drive Mercedes Benz. What is wrong with that? 

Our per capita GDP is now about RM25,000 per annum. The Gomen wants to  move us to a higher income of RM45,000 per capita by 2020. That is an income increment of 80% over the remaining 8 years or about 10% a year. Our economic growth is now in the 5% to 6% range.  Folks that higher income is NOT going to happen to everyone. 

(I also think the per capita income of the Malaysian Chinese is already above RM45,000. So are a sizeable number of Indians above this threshold)  The per capita GDP of Americans is already about RM145,000, which is almost six times our per capita GDP. Yet the Amerivans pay only one third to half the prices for their cars.

The Honda Accord sells for RM64,000 in the US versus RM150,000 here in Malaysia. Honda CRV sells for RM67,000 in the US versus RM150,000 here in Malaysia. The BMW 528 sells for RM149,000 in the US versus RM400,000 here in Malaysia.

It is true that Malaysians may end up paying 1/3 to 1/2 their monthly incomes for their cars (monthly instalments plus maintenance). The Americans who earn six times more than us pay 1/3 or 1/2 for the same cars.  No business or economic logic can justify this. The only way anyone can justify this vast discrepancy is if you are proud, arrogant, stupid or all three.

Now here is an easy method to achieve three things : 

i.   raise the disposable income of our people 

ii.  lower the cost of living 

iii. reduce Gomen expenditure

It is simple - LOWER THE SELLING PRICES OF CARS.

If a Honda Accord sells for only RM64,000 in Malaysia (as it should) instead of RM150,000, then your monthly car instalment will be three times less or 1/3 only. If you are paying RM1,500 per month, you may only pay RM500. Immediately you save RM1000 - which goes to your disposable income. That is RM12,000 a year. That is two way airfare for eight people to Beijing and back. Travelling does open up our horizons and our minds, especially childrens' minds. That should also improve our lives. Which should lead to better expectations, better outlooks which can also lead to higher incomes.

Gomen expenditure (taxpayers funds) will be reduced because the Gomen will not have to spend as much money to raise our incomes to RM45,000. If the burden of their monthly car instalments are reduced to 1/3 people wont feel as much of a pinch if they are not earning RM45,000 p.a. 

Yes even the kerani will be driving Honda Accords (to the chagrin of the feudalistic dunggus). But lets prepare for that. For the Penang, JB and KL people - spread out the urban areas. Build more townships and business centres complete with super duper malls, hotels, hospitals, entertainment outlets and spread them out. Spread out the factories. Then people will not congregate in just one location. 

In urban areas like KL replace major junctions like traffic lite junctions and roundabouts with flyovers and underpasses to smoothen traffic flow. It has to be an ongoing effort. As the population increases we have to keep adjusting.

Then people can live more spread out because car prices are cheaper. They can afford car ownership without breaking the piggy bank.

Even little things help. We have U turns at some traffic light juncions. You must drive to the end of the road divider and then make the U turn. In South Korea they remove the last 50 feet of the road divider and make it a "U turn Zone". So when the light is red for the opposing traffic, up to five cars can take the U turn at the same time.

So we have to constantly innovate. They say if car duties and taxes are reduced the Gomen will lose RM8.0 billion in revenue. That may be so but other tax revenue will increase because the people will spend more rom the savings they make in cheaper car prices. 

Here is the golden rule : Jangan menyusahkan manusia. Make thing easy for the people. 

You do not understand this simple rule, you invite disaster.