Ex-Proton CEO Urges Caution on Vehicle Price Cuts

Malaysia’s People's Alliance opposition party is wrong to call for quick cuts to vehicle prices as part of its campaign for the May 5 federal election, a former Proton official says.

“In my view, the reductions can be done, but they must be studied thoroughly and various aspects have to be taken into consideration,” ex- CEO Tahir Zainal tells the government’s Bernama news agency.

“Many stakeholders are involved, because this not a small industry but a big one involving many investors.”

Zainal says prices could be reduced in stages, but several important factors must be considered including the effect on the used-car market and parts makers.

When car prices were reduced 5% last year, he says, the used-car market fell 10%.

“If we do not take into consideration the used-car market, the situation will be serious (and) will affect the economy and the car industry itself," Zainal says. “We have to also ensure that the economy is strong and the car market stable and sustainable in the long run.”

Earlier this year, Proton welcomed an announcement by International Trade and Industry Minister Mustapa Mohamed of the gradual introduction of new automotive-industry policies intended to reduce the prices of cars.

Proton said at the time that it already anticipated policy shifts toward market liberalization and was optimistic it could compete in a fully liberalized market with affordable and good-quality cars.

Car prices are also the focus of attention in neighboring Thailand, where the government and auto makers are being urged to lower the prices of hybrid vehicles if they really want to promote the segment.

Yossapong Laoonual, of the engineering faculty at King Mongkut’s University of Technology Thonburi, says prices of hybrid and electric vehicles in Thailand are more than double those of similar models available in the U.S., U.K. and Japan.

He tells the Bangkok Post most hybrid cars are imported, and auto makers have set their own prices due to limited competition in the segment.

If hybrid cars accounted for 15% of Thai sales, the researcher says, it would save 333 million gallons (1.3 billion L) of imported fuel oil worth TB31.6 billion ($1.1 billion) and cut greenhouse-gas emissions by 8.8 million tons (8 million t).

“The government should be more aggressive in promoting hybrid and electric cars in the short and long term,” Yossapong says. He wants to see the government offer tax waivers for hybrid imports and give more tax incentives to auto makers to stimulate investment in the sector.

Of the 1.43 million vehicles sold last year in Thailand, 20,000 were hybrids, and Yossapong says without government support they will account for only 58,000 of the 2.5 million units expected to be sold in 2021.