It appears that Volvo's entry with the XC90 plug-in hybrid has really opened up the doors for other car makers to follow. BMW being the one that is hot on this topic with the introduction of the X5 plug-in hybrid and the soon to be launched 3 series plug-in hybrid. The key point about jumping on this bandwagon is to enjoy the tax incentives provided by the Malaysian Government. Previously when the Govt closed the incentive for imported hybrid cars the sales of hybrid cars dried up literally over night. The Govt changed its rules that now requires car makers to locally assemble the hybrids to qualify for the tax incentive.
The tax incentive is a big deal as it can tremendously reduce the price of the car for consumer. Like with BMW's X5 plug-in hybrid the price is easily 30% cheaper than if it was fully imported. The new 3 series plug-in hybrid is expected to be priced around US$60,000 which is considerably cheap compared to fully imported version that would very likely cost US$20k more. what this means is that ownership of the car becomes more attractive to the consumer and will allow them to undercut Mercedes and Audi of the comparable model.
Malaysian car buyers are price sensitive and it is very obvious with the impressive sales of the X5 hybrid thus far. Saving 30% on the car meant that the car is within range for more buyers. I now wonder which other car company will follow this trend. If many car makers also embark on this type of tax incentive exploitation it won't be long before the Malaysian Govt will stop providing such incentives since it will erode away their tax revenue from the auto industry.
Since many car makers already have their own plug-in hybrids it is likely that many will be seriously studying this tax incentive however setting up an assembly facility for one or two models may not be feasible but tagging on with an existing production facility will make sense.
Malaysia has one of the highest taxes imposed on cars and reducing the amount of tax paid per car will make a massive difference to the consumer. BMW and Volvo are definitely bold to take this step and it is paying off well for them. It is good to see creative thinking of these car companies and I hope that more car makers will follow the trend.
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