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Ministry of International Trade and Industry Malaysia Official Blog

“COST OF VEHICLE OWNERSHIP IN MALAYSIA IS STILL AMONG THE MOST COMPETITIVE IN ASEAN”

Posted by admin2 on June 23, 2015 at 10:41 am
Passenger cars prices in Malaysia have always been perceived to be higher than those sold in the neighbouring ASEAN countries. “Undeniably, at a first glance of the sales prices comparisons of popular models the claim appeared to be true, except when compared to prices in Singapore, said Madani Sahari, CEO of the Malaysia Automotive Institute (MAI)”
Madani further elaborated that MAI has done comparative analysis of these popular models within the ASEAN countries.
The price of Honda City and Toyota Vios of the 1500cc segment sold in Thailand are the cheapest in ASEAN, lower by 40% on average of the sales price in Malaysia. Similarly, the prices of these two marques in Philippines, Indonesia and Vietnam are also lower by 32%, 2% and 1.8% on average respectively.
Within the 1800 cc segment, the price of Honda Civic cheapest in Philippines, lower by 43%, while the prices of the model in Thailand and Vietnam are lower by 35% and 5% on average respectively. However, the price of Honda Civic sold in Indonesia is slightly higher by 3% compared to Malaysia. The price of Toyota Altis sold in Thailand is the cheapest in ASEAN, lower by 44%, while, the prices in Philippines, Indonesia, and Vietnam are also lower by 38%, 29% and 7% on average respectively.
Within the 2000 cc and above segment, the prices of Toyota Camry sold in the Philippines and Thailand are among the cheapest in ASEAN. It is lower by 32% and 16% compared to the sales price in Malaysia respectively. However, the prices of Toyota Camry in Indonesia and Vietnam are respectively higher by 11% and 5%.
It is also interesting to note, according to Madani that the prices of all these cars are most expensive in Singapore. Compared to Malaysia, the sales price of Toyota and Honda models in Singapore is higher by an average of 137%
Madani added that “In a broader perspective, when an individual intent to purchase a car, in reality that individual is seeking a mode of transportation to move from place to place. Public transport is an alternative but owing a car is more convenient. Therefore, an in-depth analysis is necessary to evaluate the cost of transportation rather than the cost of the new car”.
In this respect, the purchase price of the car and its running cost, inclusive of; registration fee, insurance premium, road tax and fuel cost should be computed for a predetermined period for the car to be driven by the individual. The computation is herein fundamentally termed as “Cost of Vehicle Ownership (CVO)”
It is noteworthy that Malaysia imposes the lowest road tax and registration fee amongst ASEAN countries parallel to that of Philippines, Thailand and Vietnam. On the other hand, Singapore and Indonesia are currently imposing much higher yearly road tax and registration fee amounting to 577% and 442% that of Malaysia respectively.
Vehicles annual insurance premium in Malaysia, Philippines and Vietnam are among the lowest, while annual premium in Thailand, Singapore and Indonesia are much higher relative to Malaysia in the order of 210%, 175% and 126% higher respectively.
Madani commented that critical among the cost elements prescribed earlier is the cost of fuel in running a vehicle.
Malaysia has the lowest fuel price compared to other ASEAN countries due to subsidy rationalisation of fuel by the government, while Thailand has the highest fuel price followed by Singapore, Indonesia, Vietnam and Philippines.
A comparison of CVO i.e. taking into account the cost of fuel, road tax and insurance, shows that Malaysia has the second lowest CVO after the Philippines. This is mainly due to fuel being subsidized and a relatively lower annual road tax and insurance premium.
When compared against Thailand and Indonesia, the CVO in Malaysia is lower by 39% and 12% respectively.
Note: Simulation of vehicle cost ownership has considered a one-time weekly refueling for a period of 5 years and annual renewal of road tax and insurance premium.
A simulation of CVO in Malaysia using non-subsidized fuel shows that Malaysia ranked third lowest after the Philippines and Vietnam. And when compared against Thailand and Indonesia, the cost of vehicle ownership in Malaysia is still lower by 29% and 3% respectively.
Table 1 – Cost of Fuel
COUNTRY
FUEL PRICE PER LITRE
(USD)
Thailand
1.24
Singapore
1.19
Indonesia
0.92
Vietnam
0.99
Philippines
0.77
Malaysia
Subsidised
0.62
Not Subsidised
1,04
Note: Price may fluctuate according to exchange rates and global oil price.

Both the Sales Price and CVO for luxury BMW 528i model, position Malaysia as the third cheapest relative to the six ASEAN countries.
Taking this factor into consideration, it is becoming clear that all the cost elements attributing to the CVO in Malaysia is high benefiting the common population in need of transportation convenience, while those who prefer more luxury and prestigious vehicles the cost elements are slightly lower.
The earlier perception of Malaysia passenger car prices are higher among the ASEAN countries is rather unfounded if solely the sales values are considered. In all fairness, Malaysia Automotive Institute (MAI) has taken the initiative to provide the above analysis to correct this unfavourable perception which to a certain extent has created some controversial opinions negatively affecting the market situation for Malaysian automotive industry.
A fair assessment on the value of a vehicle must take into consideration of the overall purchase price plus the running costs of the vehicle within a country, reflecting the actual transportation cost it provides. The above analysis demonstrates that Malaysia current ranked second cheapest country to own a vehicle and this is largely attributed to the nation fuel price being subsidised.
However, a similar analysis carried out for a non-subsidised fuel scenario, Malaysia CVO will rank third compared to its ASEAN counterpart and still largely cheaper than Thailand and slightly to Indonesia.

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