THE government has no plans to abolish the excise duty on cars as a mechanism to reduce car prices.

Instead, it will look into other approaches such as a shift from importing completely built-up units (CBU) to completely knocked down (CKD) vehicles, which are locally assembled.

Deputy International Trade and Industry Minister Datuk Hamim Samuri said the government would fulfil its promise of reducing car prices by between 20 and 30 per cent in the next five years.

However, he said abolishing the excise duty was not a solution as it would not necessarily ensure a reduction in car prices.

“Car prices are determined by manufacturers and assemblers based on market factors like the price of component parts, foreign exchange rate, transport costs and insurance.

“Abolishing the excise duty would also result in a loss of RM7 billion in tax revenue annually. This would limit the government’s ability to meet the basic needs of the people,” he said in response to a question from Datuk Chua Tee Yong (BN-Labis) yesterday.

Hamim said reduction of car prices remained an important agenda in the review of the National Automotive Policy, but said such a move would need to consider the interests of all stakeholders, including consumers, manufacturers, distributors and financial institutions offering car loans.

He said the government had already urged local carmakers to reduce their prices through their respective marketing strategies, such as promotional rebates and vouchers.