Car Price Reduction Target on Track


26 August 2014

CYBERJAYA: New car launches are sporting lower price tags this year, with reductions of 7% to 19% on average, said Malaysia Automotive Institutes (MAI) CEO Madani Sahari.


"The car price reduction of 7% to 19% this year, is based on new models that have been launched this year. On average, it is less than 5%. Our target on average is about 5% for 2014. For 2013, there was a 4.97% reduction in car prices. This year, we expect 5% reduction on average," he told reporters at a briefing on the MAI-Lafarge Automotive & Logistic Safety Exhibition 2014 yesterday.


Under the National Automotive Policy (NAP) 2014, the target is to reduce car prices by 25% by 2018.


"One of the most obvious reasons is market competition because the government has liberalised the automotive industry. When there is market competition, the players have to compete, in terms of pricing (besides quality)," he said.


He said the gradual reduction of car prices gives car makers the time and opportunity to optimise their operations and reduce production costs, by reducing wastages and increasing quality and productivity.


"Apart from that, the gradual car price reduction is important to ensure there are still second hand values," he added.


Meanwhile, Madani said that the Euro 5 diesel will be available in Johor in a month's time, following a delay from the original timeline of July 1.


"We are going to implement first in the Johor area because of the need of our lorries to go into Singapore for the lower HSU (Hartridge Smoke Unit) requirement. The company that has agreed to do so need to do some engineering works.


"We as an observer, an outsider, thought that it is a straight forward thing, just pump in the Euro 5 and that's it. Actually it's not that straight forward. They need to do some engineering work in the petrol station and that work needs to be approved by the local authorities like the Fire Department and so on. So that's still work in progress but it will be out in a month's time for Johor," said Madani.


In earlier reports, he had said that BHP will bring in Euro 5 diesel in Johor to ensure that lorry operators comply with Singapore's new regulation whereby all in-use diesel powered vehicles must achieve a smoke opacity test result of 40 HSU or lower.


"Now, other oil companies are also thinking but they are still undertaking a study on whether it is feasible for them to introduce Euro 5 in southern part of Malaysia. Actually it is an open platform, anybody can start supplying Euro 5. It is not exclusive to any oil company," he said yesterday.


On the outlook for the automotive industry, Madani said MAI expects car sales to increase from September onwards, especially with the launching of new models by Perodua and Proton, and sales are expected to exceed the 670,000 units forecasted by the Malaysian Automotive Association (MAA).


"MAI for next year, we analysed (the figures) and based on this year's car sales, we expect sales of 700,000 for 2015," he said.


On Proton and Perodua, Madani said both national car makers have started on their respective transformation plans and MAI is confident that both companies will be able to achieve their targets.


"We are confident with the existing management of Proton and Perodua to deliver what they need to do to be globally competitive. I know what they are doing...I'm confident they will achieve the target."


The MAI-Lafarge Automotive & Logistic Safety Exhibition 2014 will be jointly organised by MAI and Lafarge Malaysia Bhd. The event will be held at MATRADE, Jalan Duta in Kuala Lumpur from Sept 5 till 7.


The public event will feature some 80 exhibitors and 20,000 visitors are expected at the event.