MAI On Cost of Vehicle Ownership in Malaysia

Copied from http://www.cbt.com.my/2012/12/19/mai-on-cost-of-vehicle-ownership-in-malaysia
at 20-12-2012 - My point of you that this article is most logic on Cost of Vehicle. So don't be so sad, our car is not that expensive what we had tot.
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Contrary to popular belief, Malaysia has one of the lowest total cost of vehicle ownership in the region.

This is according to the Malaysia Automotive Association (MAI) study in February on the cost of vehicle ownership (CVO).

Understandably, many were doubtful of the findings and wondered if it was a case of clever statistical play.
Malaysians believe that the cost of owning a car in the country is among the highest in the world. Even Cars, Bikes and Trucks have our own fair share of doubt.

For instance, when Proton introduced the Preve to Australia, it was offered at a starting price of A$18,990 (RM60,140).

According to the 2011 Australian Census data, the average Australian household makes A$4,936 (RM15,600) a month. A Proton Preve would be equivalent to about four months salary, affordable enough to be purchased with cash.

In Malaysia, where the average household income is RM4,025 (Department of Statistics figures), the Preve sells from RM59,990, translating to about 15 months salary.

With this background, we spoke to MAI chief executive officer Madani Sahari to better understand the CVO study.

Madani's team even provided us with a detailed breakdown of the numbers used in the CVO study, not just for one car model, but eight different models from five different segments, made by five different carmakers.

To ensure that the study was representative of the Malaysian market, all models selected for benchmarking were either the top or top two best selling models in their representative segment.

As different markets had slightly different requirements and priorities, specifications of the vehicles compared may differ slightly.

The accompanying table gives more information. The figures are projected based on a five-year ownership period.

Right click to enlarge.

The best selling non-national car in Malaysia is the Toyota Vios. Toyota's entry level sedan is sold across Asean and thus the model is ideal for a benchmarking study.

A Toyota Vios 1.5G retails in Malaysia for RM87,313. The same model is sold at a significantly cheaper price of RM69,000 in Thailand and RM78,550 in Indonesia.

MAI noted that interest rate on car loans in Thailand is around 4.5 per cent while in Indonesia the rate is 5 per cent.

Over a five-year period, the Vios cost 80 per cent more to insure in Thailand: RM22,823 compared to RM12,500 in Malaysia. Indonesian Vios owners pay RM22,500 to insure a Vios 1.5G.

Malaysian drivers also pay a rather low road tax, at only RM90 per year for a 1.5-litre sedan like the Toyota Vios. Over a five-year period, this amounts to only RM450.

Thai and Indonesian Vios owners pay an equivalent of RM1,400 and RM1,571 respectively.

In Malaysia, RON95 grade fuel is subsidised to the tune of around RM0.70 per litre while sales tax is waived.

And with subsidised fuel, Malaysian Vios owners enjoy the second lowest ownership cost in the region, after Philippines.

A Thai and Indonesian Vios owner will have to pay 13 and 18 per cent higher respectively.

When considering a scenario where fuel subsidy is removed, Malaysian Vios owners would still pay six per cent less than Thai owners and 10 per cent less than Indonesian owners.

At point of publishing, Thai motorists pay an equivalent of RM4.30 per litre for RON91 petrol while Indonesia motorists pay RM2.80 per litre for RON92 petrol. Both countries impose excise duties on transport fuel.

Having said that, MAI recognised that one factor that was not included in this study is toll charges.

Madani explained that it would be very difficult to key in toll charges paid by the average Malaysian. Most tolled roads are located within Klang Valley and are not applicable to residents in other city centres.

However, Madani said that for the sake of comparison, RM10 per day can be added for toll charges. Multiply that by five working days per week and four weeks a month, toll charges will total up to around RM12,000 over a period of five years.

Even after factoring toll charges, the total cost of vehicle ownership in Malaysia is within comparable distance with our neighbours.

The CVO study was conducted earlier this year but since then there have been a number of changes affecting car prices in the region.

Effective June 15 this year, the Indonesian Central Bank introduced a new financial lending guideline requiring a 30 per cent deposit for non-commercial use four-wheeler motor vehicles. Commercial vehicles require a slightly lower 20 per cent downpayment.

Interest rates for car loans are now between seven and nine per cent.

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 Below are the good answer given by admin on one of the questions given

Well how many brands are selling a comparable model? Read our accompanying story on the need for competition, linked at the bottom of the story. You wouldn't expect car companies to do charity so buyers like yourself can buy them at cheaper prices do you?

Plus, from a market positioning point of view, there is no way Toyota will price the Prius in the same range as a Vios or a Corolla Altis.

The US is an extremely competitive open market. It sells more than 15 million cars a year versus 600,000 in Malaysia. So there is also the scale issue and the type of discounts US importers can haggle with Japan.

It's like you walk into a store and asks for the best price for 10 units while the American and Chinese fella next to you says 'Give me 100 units and I want them delivered next week. Don't waste time talking about price I have 100 more orders coming next month, if you can deliver on my time then we can talk.'

For these high volume importers, the issue is not about the price, but how soon they can get their delivery. As a manufacturer, for sure you will cut steep discounts for them.

How you think the Malaysian importer is going to get a good price?