The Tale of 2 Bijik Kereta Murah

Been watching this particular discussion from the sidelines for a while...

Was surprised when BN included it into their Aku Janji...

PR claims that it was their "original" idea while BN says it was already embedded in the long term reform plan of the automotive industry...

Consider this...

Both side wants to bring the cost of kereta down...

Bear in mind that the policy will only benefit NEW CAR Buyers...(from the very little details that I have..do send in any info if you think that existing car owners will benefit from it)

For those who are on loans....the Collateral Value (2nd hand car value) will drop significantly once the "policies" are implemented.....

The Collateral Value actually drops immediately after you drive the car out of the dealership...now imagine a policy that will "reduce" car prices after your purchase date

I wonder if either BN or PR plans to provide a rebate on the taxes paid by existing car owners...

Financial Institutions will be put into the corner.....as it is 25% of bankruptcy cases of individuals arises out of failure to service their Hire Purchase

Source here

To prevent a meltdown of the HP market, BNM would first have to step in by limiting the maximum credit exposure Vs the Collateral Value.....eg : 50% of Car Value only can be financed....sendiri mau ingat la brader lu pergi cari duit nak bayar deposit....


Been thinking about how best to visualise this scenario....ended up with this.....have a look folks

The Y (Left Side) axis show the number of people that the vehicle can carry, the Y (Right Side) is the Tax imposed on the car and the X axis if the fuel efficiency i.e. KM per litre based on manufacturer data.

So the trade off that we are looking at is that the more efficient the car is and the more people it could carry on a single journey should put the car in a low tax category....

The least efficient the car is eg (supercars) and the least people friendly (paling kuat bole masuk 2 minah pakai mini skirt) it is the higher the tax imposed on it.....

Pretty straighforward rite....

Public Transportation Investment typically targets to have something that can carry lots of people and still be efficient to run.....so that is the blue box kat bawah.....

The other blue box is the 'Green" Technology incentives...we've seen some of these on the road now...pretty efficient strange looking thing....I got one....it does 18 to 20 Km per liter for me town drive in KL....

Now back to the 2 Policy on "Offer".....

Poster sana sini "Turunkan Harga Kereta"....."Turunkan Harga Minyak"

Lu ingat ni duit bapak lu ke......

Cuba la lu pikir betui2 ada masuk akal ke ??


Bro HishamH had a piece on Cheaper Car Vs Cheaper Gas (here)

Needless to say, the Manifesto wants to increase subsidies on petrol instead, which doesn’t make economic sense on many levels. Just as cheaper cars would increase car ownership, cheaper petrol would increase car use and therefore increase the public costs incurred from same. There would also be greater wastage, as prices lower than the market-clearing price reduces the incentive to use a resource efficiently. Adoption of alternative fuels and green auto technology would be set back. The public costs would well outweigh any private benefits from such a policy mix, even if you exclude the fiscal implications. Moreover, cheaper petrol and cheaper cars would severely undermine the viability of an expansion in public transport, which both sides ostensibly support. Given the relative merits of private (convenience) versus public transport (cost saving), reducing the gap between the two makes the economic and financial case for public transport that much weaker. Public transport would turn into a publicly funded white elephant. The economic case for removing excise duties on cars is clear – more competition, more consumer choice, greater efficiency. You only have to account for the negative externalities of car use.The economic case for increasing subsidies on petrol is even clearer, because there isn’t one. Instead, both economic theory and global practice suggest that the optimum, social welfare-maximising policy is to tax petrol use, not subsidise it. Put these together with the plan for public transport, and you have what can best be described as an inconsistent, even schizophrenic, approach to public and private transportation. The very same analysis that supports removing duties on cars provides the rationale for removing, not increasing, subsidies on petrol. Reducing the private costs of car use, which are already low, will guarantee the failure of public transport policy. The public non-fiscal costs of reducing private costs of car use will also likely offset the private benefits involved. From my point of view, this is simply not a good, or even coherent, policy mix.

 Cheap car is a populist measure..

If you really want to provide cheap car can you not do it in a more elegant way?

For instance why can't the "Offer" be  A Tax Free 5 to 7 seater MPV or SUV with minimum km per liter (eg > 15) for each family....just one car per family if you really want to....

Or a toll exempt policy for Electric or Hybrid Car?

opps forgot...someone wanted to Hapus kan Tol...... :P

Instead a whole sapubersih approach was adopted by either side........

Gua rasa macam kureng sikit la brader.......dah la if it is implemented yang betul2 benefit tu orang yang ada duit doe read Chewal piece here

So where do we go from here then?