Under the National Automotive Policy (NAP) 2014 which takes effect today, International Trade and Industry Minister Datuk Seri Mustapa Mohamed said this was part of the Barisan Nasional election manifesto which pledged to reduce prices of cars.
"During GE13, BN promised a gradual reduction of prices ranging from 20% to 30% over the next five years.
"A Car Price Reduction framework has been developed to fulfill the promise of gradual price reduction. The framework consists of measures to be taken by the Government and the industry," he said in a briefing to media and automotive stakeholders on the NAP 2014.
Putrajaya had consistently come under fire from Pakatan Rakyat who accused the Barisan Nasional federal government of not fulfilling its May general election promises, which among others, pledged to reduce car prices gradually.
The underlying factor, pointed out Mustapa, was liberalisation of the automotive industry to create a more competitive environment and enable greater market forces leading to more competitive prices.
He said the industry players play a vital role in making their operation more competitive to reduce operation costs.
"We cannot force car prices to be reduced but we believe in competition and in line with our election manifesto, we remain committed to the 20% - 30% reduction.
"I have been asked in Parliament why the car prices are still high, we have told them it cannot happen immediately but it will happen in five years," he said.
He said more new models and variants will be introduced at competitive prices this year, pointing out that models such as Saga SV, Persona SV, Viva, Alza and MyVi S series, Honda Jazz and Nissan Almera were introduced at reduced prices of between 3% and 17%.
These models accounted for 30% of market share last year.
In line with the NAP 2014 objective to make Malaysia a regional hub for energy efficient vehicles (EEVs), Mustapa said exemption of excise duties and import taxes for hybrids and electric vehicles will be extended for models that are assembled in Malaysia.
EEV manufacturers will not be subjected to any investment conditions such as number of units to be produced or equity conditions.
Additionally, financial aid totalling RM2 billion will be given for EEV manufacturers in the next six years, of which RM1.89 billion consisted of soft loan and RM175 million in the form of grants for human capital and Bumiputera development.
Although Mustapa did not have a targeted amount of investment, he hopes it would be higher than the RM5 billion in 2012.
He also said the government is in talks with companies on the EEV schemes but declined to name them. – January 20, 2014.