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June 15, 2013

Lower car prices because of pre-festive promotions

By HONG BOON HOW
hong@thestar.com.my

PETALING JAYA: There is no slash in car prices per se, with manufacturers explaining that pre-festive promotions and stock-clearing are being conducted.

Responding to reports of a reduction in certain car prices, several firms said models with lower specifications were being offered and extra “freebies” thrown in.

An automotive industry observer said car companies seldom reduced prices unless there was a reduction in duty by the Government.

Another scenario which led to lower prices was if an imported model was locally assembled, with the higher amount of local components used and reduced taxes translating to reduced costs.

“For example, the Mini Countryman, which was re-launched as a locally-assembled model on Thursday, and the Mazda CX-5 last week are about 10% cheaper than the previous models which were first introduced here as fully imported cars,” he said.

The official said as several popular Japanese and foreign models were already locally-assembled, it would not be possible to further reduce prices.

“Reducing car prices might be an easy way to boost car sales but this will affect the resale value of such models and make current owners unhappy.

“Malaysian car buyers place high importance on the resale value of their cars and all car manufacturers are aware of this,” he said.

As such, he said car companies preferred to push sales by offering promotions and deals that would not affect resale value.

These would usually be by special loan rates, freebies like free window tinting, leather seat upgrade, GPS navigation, extended warranties and fuel vouchers and even offering LCD televisions to woo buyers.

At present, Toyota, Mitsubishi, Nissan and Peugeot are offering special promotions and deals.

“The value of deals and packages under our promotion can easily run up to savings of several thousands of ringgit,” said an UMW Toyota Motor spokesman.

Today, Proton will unveil special low-priced variants of its models, with its executive chairman Tan Sri Mohd Khamil Jamil stating that the 10% reduction in prices was possible due to “value engineering”.

A continental car company spokesman said the current competitive environment had caused many car makers to adopt aggressive marketing campaigns.

“Customers have a wide choice of models and brands to choose from these days, so we will have to up our game by offering the best value and deals to close sales,” he said.

The Malaysian Automotive Association is looking at a total industry volume of 640,000 units this year. Vehicle sales for the first four months of the year stood at 210,153 units.