Background info:
Recently, I have been in some pretty heated arguments with a few very harsh proton critics at paultan's blog. One of their key arguments was that malaysians are paying artificially high prices for proton cars. I used to think that way too... until I went looking for a car in Melbourne. Cars are not as cheap overseas as most malaysians seem to think. Certainly not as cheap as implied by coffeeshop talk. I do agree that cars can be cheaper if NAP didnt exist. But not by much...and here are my arguments as to why it is so:


for the record: I disagree with NAP. Although i think it's necessary for our car industry's survival.


Myth One: A Camry will be only RM60k if NAP/Proton didnt exist

This myth comes from the idea that all foreign cars are taxed 300%. Therefore, japanese cars will only be 1/3rd of their current OTR price without NAP tariffs. This myth is very very untrue. Even in Thailand a Camry is about RM137k. In australia they range from about RM100k to RM150k OTR exclusive of insurance. Some misguided guy on the PT forum actually thought a "Subaru impreza sportscar" was only RM60k if proton/NAP didnt exist. Such is what you hear in coffeeshops. It's simply not true. The impreza is a normal mid sized sedan (2.0L class) that costs about RM90k+ OTR (without NAP). The Impreza WRX (rally sports car) will cost closer to RM180,000. Even if NAP didnt exist! The basic mercedes C-class will be about RM200k (without NAP, incl insurance OTR).


...but i saw those really low prices on the CBU Warta on the government website.

Have you ever thought that those prices may have been deflated to reduce the amount of tax on the cars? The malaysian govt also taxes proton/naza/perodua cars btw. They are also non-OTR prices, and are subject to the same extra costs as explained below:


Myth Two: Car prices on overseas websites are actual prices

One must always remember that car prices online are seldom OTR. Malaysian sites show otr prices as insurance rates are pretty standard and tax is uniform across most states. For example, a person browsing an australian site may get the idea that a Honda Jazz costs only RM60k in australia. That's simply not true. Once tax+rego+stampduty+insurance has been factored in, the price is closer to RM73400. Australian websites dont show OTR prices as insurance is not compulsory and tax varies by state (although it is roughly similar).


Myth Three: Proton cars are expensive as they are artificially inflated due to NAP.

This is another misconception. For example, an Iswara (80's technology) was selling for RM27k OTR. Sure, it's old technology, but it gets the job done and for families with a budget of under RM30k, it is affordable. Even if NAP/proton didnt exist, there will not be japanese imports that are this cheap. The cheapest japanese cars, custom made for SE asia as budget cars (eg. Vios/City), will cost about RM50k OTR if NAP/Proton didnt exist. Proton is currently offering a budget small sedan, the Persona, for only RM46k. A normal non-budget small japanese sedan like a Corolla will be about RM80k without NAP...yet some people think they can get a Corolla for the price of a Persona if proton/NAP didnt exist. That is a misconception and is simply not true. The Persona appears to be a budget small family sedan. So dont compare it's trim and build to the more expensive makes as it is not a fair comparison (unless of course the persona was RM70-80k OTR then yes, you should compare the interior trim and build with cars lik the corolla). Bottom line: proton cars are reasonably priced. Even if NAP was non existant, similar sized japanese or continental imports will be more expensive. To be fair, they will have higher build quality and interior trim, but you will pay for it. A RM75k Persona anyone?


Myth Four: Proton cars are cheaper overseas than they are in Malaysia.

A Waja is RM74100-85400 OTR in the united kingdom. Some people still think that proton cars are cheaper overseas. As far as I know, the only place where some models may be marginally cheaper is at the United Arab Emirates, due to proton trying to penetrate that market (and the fact that the oligarch imposes no tax on cars and insurance is not compulsory...resulting in a lower OTR price. The gen2 in malaysia is only RM36k if there was no tax.)
*They do have slightly higher specs in the UK. ABS/airbags standard (it's a legal requirement there). Still it is more expensive even compared to similar ABS/airbag models in malaysia.



Myth Five: If Proton/NAP didnt exist, all malaysians will benifit.

Ok, let's assume proton closed down. The malaysian govt didnt develop our local car industry (no naza/perodua either) and we rely on imports just like Thailand and Indonesia. NAP does not exist. All cars taxed fairly and equally. The cheapest custom made (for SE asia) japanese budget mini-sedans, the Vios/City costs about Rm50k. Accords/Camrys cost about RM120k+ OTR. Civics and Corollas cost RM80k+ OTR. A Merc C-Class goes for RM180k OTR. Firstly, what's going to happen to all the jobs the local car industry provides? What about families who have less than RM40k to spend on a car? What about the price of fuel? Although foreign companies do provide jobs (eg. sales positions and support staff) ultimately, money will flow out of the country when we import cars. Could the govt continue to subsidize fuel? Try paying RM4/L for petrol. Assuming you travel 20,000km a year like many commuters, that amounts to an extra RM16000 in fuel costs over a 5 yr ownership period (with a realistic/moderate 8L/100km FC). Not including the inflation that will cause. More expensive groceries etc. And imported spare parts will always, always be more expensive than local parts (im referring to original parts..ask anyone who has owned a continental car about maintenance ).

Caveat: The middle and upper middle classes will BENEFIT from not having any NAP/Proton. They can afford RM60k budget sedans (Vios/City) and RM70-100k small sedans (City, Corolla). The price of a Merc will also be more reasonable at RM150 to RM180k for a baseline C-class instead of RM230k+ now. This middle/upper class can afford vegetables (figuratively lah of course) when fuel prices rise.

Not all malaysians are from above said classes.

This post has been edited by ezralimm: Oct 9 2007, 02:27 PM

Nobody will dispute that. Their quality has a bad reputation. Then again, they are improving. As far as i know most car companies have QC problems initially. Even the japanese marques had terrible reputations when they were first introduced...in fact, even when they were more than 20 yrs old.

20yrs is not a very long time for a car company. Korea banned jap imports for like 40 years to let it's car industry develop.

Proton had problems with their suppliers. Power window failures etc. But those issues are being addressed. And the bottom line is that their cars work. (not too many transmission/drivetrain problems and decently reliable) Interior build may not be top notch, but they do make cheap cars.

point taken. initial post appended.

Correct me if im wrong... but RM18k in the 1970s was worth alot more than RM18k in 2007.

I second that. The purchasing power of Malaysians is not very high. Well, in first world countries, people earn about RM40 an hour for unskilled labour (eg cashier/gardener). Of course, cost of living is also high but the bottom line is that people in first world countries have a higher purchasing power and things will be more affordable to them.

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Added on August 25, 2007, 10:33 pmIt's not that simple, i agree.

Do consider, however:

1) If a multi billion dollar part of the economy goes down, the whole chain of suppliers and parts vendors goes down with it. Tax and revenue does not only come from the sale of cars...but also from people working in the industry.

2) Cars are expensive items. If cars were only imported, the outflow of ringgit will somehow have to be balanced with exports to maintain the value of our currency and curb inflation. I admit, i dont quite see how this could be tied to the question raised. Im not an economics student. Perhaps someone can englighten us on the effect of outflow of currency and how it will affect petrol subsidies.



This post has been edited by ezralimm: Aug 25 2007, 10:33 PM

No. I NEVER CLAIMED IT WAS A "3rd world car".

I have consistantly used the term "developing country". Personally, i dont think malaysia is a 3rd world country. We are probably in a gray area in between first world and third world.

Dont put words into my mouth.

The original Vios really was a budget car built for SE asia.

I heard the newest Vios is based on the Yaris. If that were the case, then i must admit that I am at fault. Technical error. I was referring to the original vios.


And yes, perhaps my family was kinda lucky. Our proton has been going for 220,000km with no major faults.

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Added on August 31, 2007, 9:36 pmI agree, cars are always gonna be more affordable in first world countries.


Our country is only 50 years old.

But your data looks suspicious (1:6 ratio). Do you have any sources to back it up?

This post has been edited by ezralimm: Aug 31 2007, 09:36 PM

Good summary.

Replies are in BLUE.

This post has been edited by ezralimm: Sep 16 2007, 10:37 AM

I'll say it again for like the fifth time in this thread:
I also completely agree that CARS ARE MORE AFFORDABLE IN FIRST WORLD COUNTRIES.


The purpose of this thread is not to say if cars are affordable or not. It's simply to put "coffeeshop talk" into perspective and to rebut unrealistic expectations.

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Added on September 17, 2007, 3:41 pmoops... almost didnt notice your post.


1) i guess different countries have different tax structures.
2) used cars generally dont have so many additional costs.


appended:

in america, cars are minimally taxed.
If cars were tax free in malaysia, a gen2 would only be RM36k.
So yeah, a camry priced at USD24k is realistic...

Realistically, with a fair tax scenario, where all cars are taxed the same, a Camry will be about RM120k , non inclusive of insurance. (about the same as in thailand that has no NAP)


This post has been edited by ezralimm: Sep 23 2007, 09:25 PM

I agree. I think the govt is gradually and quietly moving towards a fairer tax system so that it does not disrupt the used car industry. With 110% tax, it doesnt sound right that a lancer would be RM116k, a Mazda3 RM99k and a Suzuki MPV 110k OTR.