By Eric See-To

In the 2013 general election, Barisan Nasional (BN) made a promise in its manifesto to reduce the price of cars by 20% to 30% by 2017.

But did this happen?

Yes and no – depending on which model you are talking about, and whether we are comparing apples to apples or green apples to red apples.

But what has the BN government done to reduce the notoriously high car prices from the time of Dr Mahathir Mohamad’s government?

Firstly, the practice of “franchise approved permits (APs)” as opposed to open APs for reconditioned cars was restructured.

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

This means that back then, if an official car distributor or manufacturer wanted to bring in cars to sell in Malaysia, it would have to get a franchise AP for each unit it planned to sell.

The problem then was that these official manufacturers and distributors were not issued the franchise APs directly, but had to source them from individuals who were given the permits by the trade and industry ministry, which was then under Rafidah Aziz, even as late as 2005.

Three individuals at that time, dubbed the “3 AP Kings”, got the bulk of these franchise APs and reportedly made billions a year out of these permits.

However, this system was abolished. Today, the car manufacturers and distributors get their franchise APs directly from the international trade and industry ministry without going through or paying any middlemen, as they did before.

In 2012, Prime Minister Najib Razak’s government also announced that the car import tax for Japanese vehicles would be abolished from the previous 15%. This happened in 2016 and has contributed to lower prices of Japanese cars.

The government also implemented an incentive programme with duty exemption for cars with good fuel efficiency and which meet the energy efficient vehicle (EEV) programme, a greenhouse gas emissions standard.

The abolition of the 10% sales tax on cars, which was replaced by the 6% goods and services tax in April 2015, also had a marginal effect in reducing car prices and that of their spare parts, with almost all car distributors announcing a reduction in prices.

The government also claimed to be working with car distributors and their supply chains to ensure their selling prices were at reasonable margins.

But has BN been successful in reducing car prices by between 20% and 30%, as promised?

It is important to note that due to the highly competitive nature of this industry, no model will remain unchanged for five years.

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

Due to different equipment, specifications and differences in model variants, prices change every time a newer model is launched. It is almost impossible to compare prices on a like for like basis.

However, it is possible to compare certain car models that have similar specifications, especially in the premium market.

For example, in 2012, the BMW 328i was listed at RM309,800 and the 335i at RM488,800.

In February 2017, the 330e M-Sports was launched with similar power output, better equipment levels and better fuel economy, and at a price of RM258,800 – 20% cheaper than the 328i and 47% cheaper than the 335i.

Moving further upmarket, in 2011, Mercedes-Benz Malaysia launched the locally-assembled Mercedes-Benz S350 at a price of RM840,888.

Due to various duty exemptions and EEV incentives, Mercedes-Benz announced in 2014 that the price of the new generation locally-assembled S400H – a more powerful model with better equipment levels and fuel efficiency – would cost RM587,888. This is 31% cheaper than the 2011 model.

Premium cars aside, mass-market manufacturers such as Proton, Perodua, Honda and Toyota choose to maintain their prices but pack them with better equipment and safety features.

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

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

This resulted in Honda sales overtaking Proton’s for the first time in 2016, increasing the gap to 40,000 units in 2017 – a situation that would have been unimaginable 10 years ago.

Similarly, Perodua cars have better value on their new models compared with those 10 years ago.

If you are willing to pay RM500 more than the price 13 years ago for a Myvi, you can get the 1.5 High-Spec Automatic for RM51,800, which comes with a bigger engine, six airbags, ABS, EBD, VSC, traction control (TRC) and emergency stop signal (ESS), with a fuel economy of 20.1km 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 price enabled it to exceed 200,000 unit sales per year for the first time in 2015 and maintain this sales level in the following years.

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

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

According to Paul Tan’s Automotive News, “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.”

It also reported that the new Perodua Myvi 1.3 was launched two months ago in Indonesia at Rp 182.5 million (RM52,655) for the MT or Rp 193.5 million (RM55,819) for the AT – up to 16% more expensive than prices here in Malaysia of RM44,300 to RM48,300 respectively.

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

Due to the difficulties in comparing like for like, there will always be debates and disputes on the actual percentage decrease in car prices since 2013.

However, all Malaysian car magazines and car enthusiasts will agree that Malaysians have been getting better cars at much better value in recent years.

Eric See-To is deputy director of BN’s strategic communications unit.

The views expressed are those of the author and do not necessarily reflect those of FMT.