Wednesday, October 13, 2010

Hopes for cheaper green cars

source: The star

Industry analysts call for incentives that promote hybrid or electric vehicles in Budget 2011

PETALING JAYA: Local automotive analysts and industry observers are hopeful that incentives that promote hybrid or electric vehicles in Malaysia would be announced at this year’s Budget 2011 that will be tabled on Friday.

A key step forward is to reduce the price tag of such vehicles, said Frost & Sullivan Asia Pacific automotive and transportation practice principal consultant Dushyant Sinha.

“It is imperative that hybrid and electric cars are made more affordable and acceptable to the average consumer,” he told StarBiz in an e-mail.

“It is also important to ensure simultaneous development of a composite manufacturing ecosystem, comprising both OEMs (original equipment manufacturer) and suppliers.”

Honda Malaysia Sdn Bhd and UMW Toyota Motor Sdn Bhd are the only two official franchise holders offering their own hybrid models in Malaysia, namely the Honda Civic Hybrid and Toyota Prius respectively. The models are priced from RM129,000 and RM175,000 respectively

Dushyant also said that the 50% excise duty exemption for completely-built-up (CBU) hybrid cars that would end this year, should be extended. “The exemption has certainly helped make imported models like the Toyota Prius and the Honda Civic Hybrid more affordable,” he said.

“However, these incentives need to continue beyond Dec 31, 2010, to ensure that a critical mass of vehicles is reached before demand becomes large enough to make local manufacturing and assembly feasible.” Dushyant said added incentives that reduced day-to-day operational costs, such as free parking and reductions in road tax, would be welcomed at this year’s budget.

One industry player said offering attractive incentives for hybrid and electric vehicles would encourage foreign players to set up base in Malaysia and that “this way, Malaysia could tap the expertise and know-how of players familiar in the hybrid /electric vehicle arena. Furthermore, having hybrid and electric vehicles assembled in Malaysia would make them more affordable.”

“However, setting up a hybrid or electric vehicle plant here can be costly. Furthermore, if the market for such cars are small, it might not be viable to set up base here, regardless of Government incentives,” the industry player added.

An alternative solution is to target regional markets, said an industry observer.

“If we talk about Malaysia as a hybrid production base, it must be for re-export outside Asean, given the low potential, in Malaysia, Indonesia or even Thailand,” the observer said.

Dushyant said the mass success of hybrid/electric vehicles in Malaysia was also influenced by several other factors, such as the need to educate consumers on the benefits of such cars. He noted that electric vehicles required easily accessible charging stations, which meant added cost to implement successfully.

Dushyant also said the removal of fuel subsidies by the Government would also boost the market for hybrid and electric vehicles.

Existing fuel subsidies, which make the conventional car more attractive due to the lower cost of fuel, need to be removed to enhance the acceptance of hybrid and electric vehicles. -ENDS-

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