Direction of the Automotive industry in Malaysia

The automotive industry in Malaysia looks almost certainly lost in the sense that the Malaysian govt has been procrastinating about their National Automotive Policy. When they first mooted the tax exemption for hybrid cars it opened pandora's box and a flurry of hybrid cars entered the country at much lower price due to the tax exemption. This of course meant that the govt earned less tax from these cars. The Malaysian Govt did not anticipate the sudden surge in sales for hybrid cars which affected the sales of local cars.

There is rumour that the govt will end this exemption for all hybrid cars and only allow locally assembled hybrid cars to enjoy the hybrid tax exemption. This means that only the Honda Jazz will benefit from the exemption. The sales of the locally made cars especially Proton has seen a decline as more and more Malaysians are shying away from buying Protons in search for better quality cars. Proton has not made any improvements and their latest Suprima S model only received lukewarm response.

The Govt is trying to make a balancing act by protecting Proton while trying to encourage investment from foreign car companies. The constantly changing automotive policy has left many car companies guessing and most has lost confidence in investing more than they should in Malaysia. The knock on effect of this minimal or no growth for the automotive industry in 2014. With the already high taxes imposed on cars and the constantly rising cost of living, it is unlikely that we will see any growth at all.