Car prices up or down? Let's take a drive

In GE13 (13th general election) in 2013, BN made a promise in their manifesto to reduce the price of cars between 20 percent and 30 percent by 2017.

But did this happen?

The answer is yes and no - depending on which model you are talking about and if we are comparing apple to apple or comparing green apples to red apples.

But firstly, what has the BN government done to reduce the notoriously high prices of cars under the past government of Dr Mahathir Mohamad?

Firstly, the practice of "franchisee Approved Permits" (as opposed to open APs for reconditioned cars) was restructured.

Franchise APs, are permits to bring in cars from a particular foreign factory to be sold through a particular company in Malaysia.

This means that at that time, if Honda Malaysia or Toyota Malaysia or any other official car distributor or manufacturer, wanted to bring in cars to sell a car of their own brand in Malaysia, they had to get a franchise AP for each unit of car they sell.

The problem then was that these official manufacturers and distributors were not issued the franchise APs directly but had to source them from certain individuals who were given the permits by the Ministry of International Trade and Industry (MITI), then under Rafidah Aziz - even as late as the year 2005.

Three individuals at that time, dubbed the "Three AP Kings" got the bulk of these franchise APs and were reportedly making billions every year out of these permits.

However, this system was then abolished and today, car manufacturers and distributors get their franchise APs directly from MITI without going through or paying any middle-men as in the past.

In 2012, the government under Najib Abdul Razak also announced that car import tax from Japan will be abolished from 15 percent to zero percent in the year 2016. This has been done and has contributed to lower Japanese car prices.

Incentive programmes

The government had also implemented an incentive programme for cars which have good fuel efficiency and meet certain greenhouse gas emission standards called the Energy Efficient Vehicle (EEV) programme where significant duty exemption was given. This had the effect that prices of certain car models that meet this EEV standard had dropped substantially.

The abolishing of the sales tax of 10 percent on cars which was replaced by the GST of six percent in April 2015 also had a marginal effect in reducing car prices and their spare parts, with almost all car distributors announcing a reduction in prices then.

Additionally, the government also said it was working with car distributors and their supply chain to ensure that their approved selling prices were at reasonable but not excessive profit margins.

So that is what the government had done but let us cut to the chase of whether BN was successful in reducing car prices between 20 percent to 30 percent, as promised.

The first point to note is that due to the highly competitive nature of this industry, no car model would remain unchanged for five years.

New generations of the same model and facelifts are introduced every two or three years.

Due to differing equipment and specification levels, as well as differences in model variants every time a newer model or facelift is launched, where prices would change, it is almost impossible to compare prices on a like-for-like basis.

However, it is possible to compare certain car models that are close enough to each other - especially in the premium market.

For example, the BMW 3 series launched in Malaysia in the year 2012 had their 328i listed at RM309,800 while the 335i was at RM488,800.

In February 2017, the 330e M sports with similar power output, better equipment level and better fuel economy was launched at a price of RM258,800, which is 20 percent cheaper than the 328i and 47 percent cheaper than the 335i launched in 2012.

Moving further upmarket, in the year 2011, Mercedes-Benz Malaysia launched the new facelifted locally assembled Mercedes-Benz S350 at the price of RM840,888.00.

Due to the various duty exemptions and EEV incentives, Mercedes-Benz announced in 2014 that the price of the new generation locally assembled S400H model, which again is more powerful, had much better equipment level and fuel efficiency, would cost RM587,888 – 31 percent cheaper than the previous model in 2011.

Much cheaper premium cars aside, mass-market manufacturers such as Proton, Perodua, Honda and Toyota chose to maintain their prices or reduce prices only moderately, but pack them with much better equipment and safety features.

Even then, many car models now are in fact launched at cheaper prices than those 10 or even 15 years ago.

For example, the Honda Jazz models launched 14 years ago in 2004 saw the Jazz 1.5 i-DSi, priced at RM93,888 and the Jazz 1.5 VTEC retailing for RM101,888.

In 2017, the new Jazz Hybrid which has more power, much better equipment, safety features, power and fuel efficiency was launched at RM74,800 – 20 percent to 27 percent cheaper than 14 years ago.

Cars have become more affordable

Due to the overall increase in our household income as well as car prices that are lower, cars have become more affordable than ever before.

This has resulted in Honda cars overtaking Proton's sales in the year 2016 for the first time, and increasing the gap to 40,000 units in 2017 - a situation that would have been unimaginable in 2013 or 10 years ago.

Similarly, Perodua cars have also seen a similar trend of their new models being better in value now compared to 10 years ago.

Thirteen years ago in the year 2005, you would be paying RM51,300 for MyVi's only automatic model, the Myvi 1.3EZi 1.3L which has 85hp, auto, dual airbags, ABS with fuel consumption of 13km per litre.

Last year, you could get the 1.3 Standard G AT 10 percent cheaper at RM46,300 - again with much higher specifications.

Or if you are willing to pay RM500 more than the price 13 years ago for a MyVi, you can get the Myvi 1.5 high spec auto model for RM51,800 which comes with a bigger engine, 102hp with six airbags, ABS, EBD, VSC, Traction Control (TRC) and Emergency Stop Signal (ESS) with a fuel economy of 20.1 km per litre.

Despite the increasing popularity of ride-sharing services such as Uber and Grab which have dampened car sales around the world, Myvi's competitive pricing has enabled them to exceed 200,000 units sales per year for the first time in 2015 and maintaining this sales level in 2016 and 2017.

Other car brands such as Honda, Mercedes and BMW have also been reporting breaking sales records every year for the past few years - again proving that cars are more affordable to a greater number of households.

While it may be true in the past that cars in neighbouring countries are much cheaper compared to Malaysia due to the gradual reduction in prices and various government policy changes, that perception may no longer be true today.

Here's what one car portal said two months ago.

"Well, RM60k (RM5k more than the top Myvi) buys you the base Yaris J Eco in Thailand. The compact hatchback is powered by a 1.2-litre engine, rolls on steel wheels and doesn’t have a radio.”

The same widely followed car portal also reported that the new Perodua MyVi 1.3 was also launched two months ago in Indonesia at Rp182.5 juta (RM52,655) for the MT or Rp 193.5 juta (RM55,819) for the AT - up to 16 percent more expensive than prices here in Malaysia, of RM44,300 to RM48,300.

On the other extreme, our 2014 Perodua Axia 1.0 Advance (AT), which was priced at RM41,967 here was launched in Singapore at a price of SGD$75,888 or RM231,827 then.

While the current BN government continues to invest heavily in public transport such as the LRT extension lines, the ETS, MRT and better bus and KTM Komuter services, we also understand that consumers in Malaysia have a right not to be burdened and put their lives at risk by being forced to buy grossly overpriced and unsafe cars like in the past under Mahathir.

Due to the difficulties to compare like-for-like mentioned earlier, there would always be debates and disputes on the actual percentage decrease in car prices since 2013.

However, there is no doubt that all Malaysian car magazines and Malaysian car enthusiasts would be of the opinion that Malaysians are getting better cars at a much better value in recent years.

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ERIC SEE-TO is the BN strategic communications department deputy director. - Mkini