Car prices may drop in the next two years

SERI KEMBANGAN: Consumers can look forward to a drop in car prices in the next two years, following the signing of new trade agreements including the Trans-Pacific Partnership Agreement (TPPA).
International Trade and Industry Minister II Datuk Seri Ong Ka Chuan said within the next 26 months, various trade agreements would bring out the competitiveness of the industry players.
Apart from the TPPA, Malaysia will also be signatory to the Asean Economic Community (AEC) and Asean Free Trade Agreement (AFTA) along with Japan and Australia.
"Car price reductions are facilitated in the open market policy and the whole world will explore the free trade areas with three basic principles, movement of goods and services, skilled labour and investment, which will offer competitiveness and reduce the car prices," he said.
Ong said this after officiating the Asean Autoshow 2015 at Mines International Exhibition Convention Centre here today.
When asked on the gradual TPPA effect that will lift the cap on vehicle imports from United States, he said, the market mechanism would adjust accordingly which would spur competitiveness.
"Under TPPA, cars from US and Canada will come in for 12 years to enjoy the free tax. We have to participate in this trend to compete with the international market. At least for a while, we will protect the local industry but after 12 years, you will have a choice of international cars," Ong added.
Malaysia Automotive Institute (MAI) chief executive officer Mohamed Madani Sahari believes there will be more cheaper cars down the road beginning next year as car price rationalisation exercises had already begun since 2014.
"By 2018, we estimate 20% to 22% of price reduction. As of May this year, car prices have been reduced on average by 16.5%. How did we measure this? We monitor the prices model by model, variant by variant and we do not include the promotional prices. We only include the reduction of car prices on permanent basis," he said.
However, the Malaysia Automotive Association (MAA) president Datuk Aishah Ahmad begs to differ.
"We expect the car prices will go up in 2016 due to the foreign currency exchange rate," she said. "But we are positive of our forecast for Total Industry Volume (TIV) this year at 670,000 units."
When asked why the MAA's forecast remains unchanged despite the fact of the reduced sales figures in the last few months, she said: "This is due to attractive loan packages offered lately and in October sales have increased (from previous months) with car buyers being quick to grab the new models since the dealers have indicated that next year prices will increase."
On TPPA, she says the matter is still uncertain.
"TPPA is still in the future and we need to know the details. For local industry we have not been officially briefed. Import duty will be reduced for most of the companies in Malaysia but we are not sourcing from North America as we only source from Asian countries like Japan and Korea as well European markets," said Aishah.