Foreign cars getting more affordable

Kuala Lumpur (The Star/ANN) - In a world where prices keep going up, it's good to know some things are going in the opposite direction.

That trend has been seen in the automotive sector and in Malaysia that has meant cars are becoming increasingly more affordable for consumers.

Now, it all just boils down to a choice to satisfy your whims and desires.

Prices are already reaching a narrow difference, with the recently launched Nissan Almera priced at an affordable price of 66,800 ringgit (US$22,000) in October 2012.

Despite a difference in specifications, it is marketed as a model similar to the likes of the Proton Preve, Proton Persona, and the Perodua Myvi. These national cars are priced at a range between 42,000 ringgit (US$14,000) to 72,000 ringgit (US$23,500).

The perceived lowered prices of foreign made brands had also caused a ripple effect in the automotive industry, triggering a price war among industry players towards the end of last year.

To that end, the Malaysian Automotive Institute chief executive officer Madani Sahari tells StarBizWeek that this is the effect of liberalisation.

"Liberalisation of the automotive industry is a key factor to reduce car prices. The Government has been responsible to liberalise the automotive industry through various measures.

"From January 2010 onwards, the Asean Free Trade Area (AFTA) is already effective which means import duty has been zero from within the region with removal of quantitative restrictions for completely built up (CBU) vehicles from Asean. Imports of CBUs within Asean had increased by 28.6% in 2011," he says.

Madani says that AFTA with Japan and Australia will come into full force from 2016 onwards. That could very well mean cheaper cars down the road. In years past, foreign marques have been priced at a non-competitive price as they cost much higher to widen the price gap between the national makes churned out by Proton and Perodua.

While this was done in a bid to protect the national car industry that was in its infancy stages, it had instead turned into a double-edged sword that had bred inefficiencies. That has made national carmakers work harder today to remain relevant to the market.

Although the two national car companies have been encouraged to grow in spite of the veil of protectionism, the moat surrounding non-national carmakers had forced the others to price their vehicles at a big premium to the Malaysian-made cars. According to an industry source, the Government had previously focused on the final sale price of non-national cars (the practice was stopped in 2006), instead of looking at what is reasonable, in a bid to protect the national car industry.

No doubt the intent was noble but non-national car distributors were encouraged to inflate the on-the-road (OTR) price for cars via other factors, coupled with the excise duties and import duties.

"The OTR price of cars can be increased by different ways, where marketing cost, dealer's margin, accessories and other costs can be factored in. "These are the variables that can be controlled by the distributors to inflate the price of cars more," says the source.

According to him, these costs include provisions for marketing and promotion, over trade value, and dealers' margin.

He says going by sales numbers, Malaysia had turned into one of the more profitable markets for these OEMs that had a base here.

Recognising this as a flaw, he says the government had recently requested the non-national car distributors to review their cost and price structure to look at ways to lower prices, and the outcome was the launch of the Nissan Almera at such an attractive price.

Since Oct 2012, there have been attempts to reduce car prices, and checks by StarBizWeek reveal that car prices has gone down by a fair bit compared with prices before October.

  • Peeling out at Octane Academy, the free driving school for Ford ST owners 48 minutes ago
    Peeling out at Octane Academy, the free driving school for Ford ST owners

    Buyers of Ferraris or Jaguars are used to perks from manufacturers – including racetrack lessons to help master their exotic machines. But for enthusiasts on a tighter budget, the Ford ST Octane Academy might be the sweetest deal in motoring: Buy a Ford Fiesta ST or Focus ST hatchback, and the reward is a free day of training at one of America’s longest, most-lavish road courses.

  • Why you can't buy America's greenest car 4 hours ago
    Why you can't buy America's greenest car

    Ask me or any auto expert what's the fastest car you can buy for any given amount, and we could easily cough up several options. Same for most luxurious, or off-roadable, or any other measurement. Yet there's one type of question that's far harder to answer: What's the greenest, most environmentally friendly car you can buy today?

  • Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging 4 hours ago
    Audi TT Offroad concept debuts as a 124-mpg hybrid with wireless charging

    The TT. Audi's diminutive sports car. Since production began in 1998, the two-door coupe has aged with the pugnacity of a grizzled New Yorker, but not in size. And why would it, as the arrival of the TT RS proved, adding some grit makes for a rather captivating dish. And so you'll excuse us for being puzzled by the Audi TT Offroad concept.

  • Pirates kidnap three on Singapore tanker off Malaysia
    Pirates kidnap three on Singapore tanker off Malaysia

    Armed pirates boarded a Singapore-managed oil tanker in the Strait of Malacca, kidnapping three Indonesian crew and stealing some of the vessel's shipment of diesel fuel, the International Maritime Bureau said Wednesday. The attack occurred early Tuesday off Malaysia's west coast, said Noel Choong, head of IMB's Kuala Lumpur-based piracy reporting centre. The diesel oil tanker was believed to be en route to Myanmar. "IMB is aware of the attack on the Singapore-managed ship in the Malacca Straits.

  • McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania
    McDonald's Hello Kitty sale site temporarily suspended due to fresh wave of Kitty mania

    It may not be safe to enter a McDonald’s restaurant in Singapore on Mondays starting 28 April. To celebrate the iconic Japanese character Hello Kitty’s 40th anniversary, the fast food chain announced last Friday that it would be releasing a new collection of Hello Kitty toys in McDonald’s restaurants island wide next Monday.

  • First sign of S.Korea ferry disaster was call from a frightened boy
    First sign of S.Korea ferry disaster was call from a frightened boy

    He called the emergency 119 number which put him through to the fire service, which in turn forwarded him to the coastguard two minutes later. That was followed by about 20 other calls from children on board the ship to the emergency number, a fire service officer told Reuters.