Malaysians paying double for cars?

Malaysians are paying up to twice the price of cars that Americans are paying for some cars, according to a quick survey by local press, The New Straits Times.

The survey done based on top car manufacturers’ websites has shown that cars like Honda Civic 1.8MT and Mercedes C250 cost two times less compared to the similar cars sold in Malaysia.

Malaysia is ranked as the second most expensive place to buy a car in the world, right behind Singapore, in an article, 'The 10 Most Expensive Places To Buy A Car', on the popular car news portal, Jalopnik, recently.

The article, published last month, struck a chord among many Malaysians as car prices have long been an issue of discontent among ordinary folk who have been struggling to make ends meet.

Now, coupled with the fuel price hike, the issue has once again come under the spotlight.

A quick survey of top car manufacturers’ websites reveal that Malaysians pay up to twice what American consumers pay for a similar car in America.

The survey also revealed that car prices in Malaysia are more expensive when compared to Asean countries like Thailand.

Even compared among their counterparts in Asean, especially Thailand, Malaysian car prices are considered high.

In Malaysia, car loans are stretched up to nine years, making it ‘affordable’ to own a car, but leads to higher household debts.

A report by Maybank Investment Bank Research also revealed that vehicle loans have become the second highest household debt in Malaysia, right behind mortgages for property.

Federation of Malaysian Consumers Associations (FOMCA) chief executive officer Datuk Paul Selvaraj said it was high time that the government reduce the prices of cars, especially after the reduction of petrol subsidy.

He argued that even developed countries had cheaper cars compared to Malaysia, and questioned why Malaysians must pay more for their cars.

Echoing the call for car prices to be reduced is Ratings Agency Malaysia Berhad group chief economist Dr Yeah Kim Leng.

He said bringing down car prices can lead to lower overall cost of living, as it will enhance consumer welfare.

Yeah said in the past, cars were highly taxed to protect national car-maker Proton, which was still new at that time.

However, he said this protection should no longer be allowed to go on as he believed that they do not have the economies of scale and the market size is too small.

Meanwhile, Top Gear Malaysia automotive magazine editor Hezeri Samsuri said Malaysians were quick to criticise the government about high car prices but neglected to critically examine the car sellers as well.

He said the car manufacturers throw prices in Europe and the United States, but their profit margin here is higher.

Hezeri also said that car companies were also taking advantage of the public perception that car prices were expensive in Malaysia due to taxes and protectionist policies for Proton.

In May 2013, Barisan Nasional (BN) and Prime Minister Datuk Seri Najib Razak Barisan Nasional through BN's manifesto has announced a revamping plan for the National Automotive Policy to gradually reduce car prices by 20 to 30 per cent and increasing the competitiveness of the national cars.

The plan was also echoed by International Trade and Industry Minister Datuk Seri Mustapa Mohamed who said that car prices will be reduced gradually until 2017.

Despite agreeing to the price cut, BN's call for a price reduction in cars have been critised by the opposition claiming that the plan has been adopted by their idea.