Drive on hybrid cars may falter

PETALING JAYA: The headway made by hybrid cars in the Malaysian market over the last two years could lose momentum if the long awaited National Automotive Policy (NAP) revision does not address the tax incentive issue.

As it is, car makers expect sales to plummet when the full import and excise duty exemption for them ends on New Year’s eve, and prices of such cars with engine capacity below 2,000cc will go up by RM30,000 each.

While hybrids are popular in Western markets for being eco-friendly, their popularity in Malaysia is linked to the tax incentives in Malaysia, as evident from a Star Online survey.

Of the over 3,000 respondents who took part in the poll last week, 75% said they would purchase one due to the tax incentives. 39% said they would save fuel by using a hybrid, while 16% said they would buy one for its eco-friendliness.

With the expiry of the incentives, which were provided under the previous national Budgets, but not the 2014 Budget, Honda hybrids such as the Insight, Jazz Hybrid and Civic Hybrid, and the Prius and Prius c from Toyota, will likely be priced out of reach for most people.

In view of this, the Malaysian Automotive Asso­ciation is urging the Government to continue the incentives for a longer period.

Association president Datuk Aishah Ahmad said such a short-term incentive scheme made it difficult for the industry to draw up long-term plans to evaluate the feasibility of introducing more hybrid models, especially for local assembly.

“Malaysians are still warming up to the idea of owning hybrid cars and more time is needed to create the awareness of their eco-friendly benefits,” she said.

While the number of hybrid cars sold is miniscule – around 2% of the 600,000 plus vehicles sold in Malaysia annually – interest surged after the tax incentives were introduced.

The association reported that only 322 hybrid units were sold in 2010.

After the Budget 2011 introduced full import and excise duty exemptions for hybrids, electric cars and motorcycles, sales of hybrid cars soared to 8,403 units in 2011, and almost doubling to 15,355 units last year.

The incentive applied to both com­pletely-knocked-down (locally assembled) and completely-built-up (fully imported) units.

The auto industry speculation is that the NAP revision of incentives, to be announced on Jan 15, will cover only locally assembled models.

At present, the Honda Jazz Hybrid is the only model assembled locally.

The Star Online poll also revealed that of those who would not buy a hybrid car, most (59%) said it is because of the battery, which they think will cost a bomb to replace.

Others who prefer not to buy a hybrid said they were worried about the resale value (17%), prefer to stick to the tried-and-tested petrol engine (11%), that hybrids are sluggish, and don’t drive like a normal car (7%).

Related story:
Revised NAP - last chance to get back in auto race