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To buy or not to buy a new car before Afta
By Thomas Soon,
10.30am
The majority of potential car buyers are still
confused on whether to postpone buying a new car until
2005 due to the absence of guidelines on the impending
Asean Free Trade Area (Afta) implementation, says an
international marketing consulting firm. Though no
figures were released, the firm's research analyst for
the Asia Pacific automotive market Annuar Jalaluddin
says: "Our random survey shows that the confusion is
quite widespread due to the absence of guidelines."
"Definitely, Afta is not going to be popular among
certain parties, hence the delay in arriving with
specific guidelines for its implementation," he tells
theedgedaily.com in an interview. He adds that those
comfortable in their complacency will be in for a rude
wake-up call. Frost & Sullivan says "the cagey
approach and lack of information on intended measures
and plans by the Government has kept industry players
wondering if there would be another postponement".
Whether one buys or not before Afta obviously depends
on individual needs, says an observer. However, the
expected drop in prices for imported models will be a
persuasive factor for potential buyers to delay their
purchases. Annuar says new car prices are expected to
drop up to 50 per cent, particularly for imported
models, due to greater localisation of parts and
components, significant reduction on tariffs and
stiffer competition. Foreign models are currently
subjected to tariffs of up to 42 per cent for
completely knocked down (CKD) parts and up to 300 per
cent for the completely built up units, while national
cars are taxed only 13 per cent for their CKD parts,
he says. Frost & Sullivan expects domestic sales
growth to decline to about five per cent and three per
cent during 2003 and 2004 respectively as the market
braces for the opening up of the industry. "The main
reason for the drop in growth rates in 2003 and 2004
is because customers are withholding car purchases in
the hope of cheaper cars in 2005," it says. According
to Annuar, there will be a flurry of activity of
people selling second hand cars of between five to six
years old to the market one or two years before the
full implementation of Afta sets in. "The depreciation
rate of the cars will be get higher and higher
approaching 2005," he says. Annuar also raised the
issue of whether the Malaysian road systems would be
able to handle the anticipated increase in traffic due
to more purchases of vehicles. Apart from spare parts
sellers and petrol stations, a party that will
certainly benefit from the increased traffic volume
will be the toll operators. Frost & Sullivan believes
that Afta will transform the Malaysian automotive
industry into an efficient and productive sector.
"Inefficient component parts suppliers who have been
responsible for high car prices in Malaysia will be
forced to improve their operations to retain or
increase their earnings in the wake of rising
competition," it says. The consulting firm says it is
imperative that 2005 be given the utmost attention
considering Afta's implications towards the
improvement of the automotive industry.
Comments To This Article: · Confused!!! (lynn277,
04/09/2001) I would be appreciate if Government could
give us a more clearer picture WHAT is AFTA(especially
for car industry)means to us. What type of cars will
be affected and the percentage of reduction? And will
Government impose any further rules or taxes on us if
we buy the imported car. I really confused on this
matter and don't whether to change my car or not. · To
buy or not to buy a new car before AFTA (rwk,
04/09/2001) I guess the whole country will have to
wait for Ptoton to say that they will be able to
compete. Unlike Proton, Perodua has taken some bold
moves to compete in a post AFTA environment. Proton
wants the cake and eat it too. It wants to dominate
the local market, it wants to export it's cars, but it
does not want others to sell their cars here. I have a
feeling that it does not even like Perodua, because it
made the Juara, to compete with Perodua in the smaller
c.c. market. However Juara is just a Mitsubishi
discard, with very few cosmetic changes which has made
it the most hideous thing on Malaysian roads. Proton
will have to face reality sooner or later, but like a
spoilt child, it cannot come to terms with the
predicament that it has brought itself into. So it
looks like all of us will have to wait until Proton is
good and ready, and it may take forever.
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