Friday, March 31, 2006

Car Prices In Asia-Pacific


Topping The Charts As The Costliest Place To Buy Cars

If you live in KL, Singapore, Bangkok or HK, time and again you will find some gwailo driving around in a beaten up car. We are talking about someone probably on an expatriate package driving around in a cheap car. Mostly its because they cannot envisage paying for a new car at those ridiculous local prices. They have bought and driven many cars in Australia, USA, UK or Europe but never could they imagine that cars in Asia-Pacific could cost so much. If you look at the average per capita income of these countries, you'd be surprised at how most Asians even manage to buy a car! Just have a look and compare the recommended retail prices of the following cars - the first price is in the local currency, followed by a converted price into USD for comparison sake. Not all prices or car models were available in all countries. I just selected from Malaysia, Australia, Singapore, HK and Thailand. And to think that the Malaysian government just lowered the car prices some more, Malaysian car prices cited are the "new lowered prices".

AUDI A6 2.4 Multitronic (Auto)
MYR368,000/US$100,000
AUD80,600/USD57,500
HKD431,000/USD55,500
THB4,170,000/USD107,400
SGD188,000/USD116,100

AUDI TT Coupe 1.8 Turbo (Auto)
MYR338,000/USD91,700
AUD81,200/USD58,200
HKD433,000/USD55,800
SGD186,000/USD115,000

BMW525i (A) E60
MYR398,000/USD108,000
AUD93,900/USD67,300
HKD565,000/USD72,800
SGD222,500/USD137,500

BMW 645Ci COUPE
MYR808,000/USD219,400
HKD1,298,000/USD167,200
SGD345,000/USD213,000

BMW Z4 ROADSTER 3.0
MYR468,000/USD127,000
HKD533,000/USD68,600
AUD93,400/USD67,000

CITROEN C2 VTR SENSODRIVE (Auto)
MYR130,000/USD35,300
HKD148,000/USD19,000
AUD23,000/USD16,500

HONDA CIVIC 2.0 VTi-s (a)
MYR124,000/USD33,600
HKD185,000/USD23,800
AUD26,500/USD19,000
SGD79,000/USD48,800
THB1,020,000/USD26,200

HYUNDAI SONATA 2.4L (a)
MYR122,000/USD33,100
HKD159,000/USD20,500
AUD31,500/USD22,500
SGD65,000/USD40,100

LAND ROVER 4.4 V8 (A)
MYR772,000/USD209,600
HKD1,250,000/USD161,000
AUD141,900/USD101,600
SGD368,000/USD227,500
THB8,450,000/USD217,500

MERCEDES BENZ CLS350 STANDARD (a)
MYR688,000/USD186,800
HKD935,000/USD120,500
AUD139,400/USD99,900
SGD289,000/USD178,500
THB8,600,000/USD221,400

MERCEDES BENZ S350 (A)
MYR1,230,000/USD334,000
SGD329,000/USD203,300

PROTON WAJA 1.6 (A)
MYR63,000/USD17,100
SGD56,000/USD34,600

Generally Singapore car prices tops the bunch but there is still the COE for the Singapore buyer to pay for. The COE is an entitlement for buyer to buy certain type of cars, the bigger size the engine c.c. the higher the COE. But since the COE is tradeable, it is not a full expense item. The funny thing is that the Protons and Peroduas are so much more expensive in Singapore - take it from me, don't buy the Malaysian cars if you live in Singapore, its just not worth it. The argument that cars in the US are cheap cause they have the volume is shallow. Just look at HK, its a small place, expensive place, high per capita income, great infra even, but cars are very decently priced.

The car prices have to be seen in light of the average per capita income of the residents in the respective countries:

HK - USD36,800
Australia - USD32,000
Singapore - USD29,700
Malaysia - USD10,400
Thailand - USD8,300

So, if we take the BMW 525i (A) E60, a HK resident would take 1.98 years to pay it off. An Australian would take 2.1 years. A Singaporean would take 4.6 years. While a Malaysian would take 10.3 years. That is why so many gwailos would never ever buy new cars while living in Asia cause its ridiculous. The even more astounding fact is that, you will find an even higher ratio of the luxury cars being driven on the roads in Asia-Pacific!!!

While it is certainly cheaper (relatively) to buy in HK, the cost of maintaining a car in HK is very prohibitive when it comes to fuel, parking fees and parking spaces. For Malaysia, even with the recent price reduction, it is silly to have such high car prices when mobility is so important in Malaysia and the country do not have such congested city streets (relatively) when compared to Singapore, Bangkok or HK. It is downright embaressing when Malaysia even produces cars on its own. Countries that do not enjoys cheaper car prices??!!

To further emphasise how high car prices are for the general public in Malaysia, we have the Approved Permits (APs) which are basically rights for special car import permits. It used to be sparingly issued to some royalty or people coming to live in / coming back to Malaysia. A decade ago, the APs got issued in abundance - to magnify the distortion in prices, AP holders can import cars from overseas (reconditioned or new) and pay all the necessary taxes and duties, and still end up making tons of money selling to Malaysians. Why issue so many APs when car prices are artificially held up already. Its like raising the price of cigarettes to an artificially high US$8 a pack and at the same time giving APs to certain well connected groups to import on their own. These people, after paying all the taxes will still make supernormal profits selling at US$7.80! Where is the logic of the NAP? The fact that APs have been changing hands at RM30,000 to RM40,000, after the holders just paid a few hundred ringgit for it, further pisses the entire nation (except those connected enough to get those APs).

It is still OK for the average citizen in HK or Singapore as many do not own cars as the public transportation system is good. However, the situation is very different in Thailand and Malaysia, you need a car to move around. Even the massively subsidised fuel prices do not come anywhere close to curtailing the negative effects caused by the high car prices. While Thailand's fuel prices are slightly higher than Malaysia, at least when you drive in Thailand, you don't have to pay toll. Try driving from Johor to Kedah, and compare that from south of Thailand to Bangkok. For more than 1,000 miles in Thailand leading to Bangkok, not one toll station. So, what is so precious about Malaysia that we have such notoriously high car prices, low fuel prices but tolls everywhere... all on a per capita that is in the bottom half of the world, but with car prices at the top ten percent in terms of cost in the world??!!

Cars are a necessity not a luxury in those two countries. As for Malaysia - the opportunity cost, loss in purchasing power, loss in economic wealth, impairment in the strive for efficient utilisation of resources - just to protect the unimpressive (inefficient) local car manufacturers, is just too much to bear. Get this over and done with already!

People, cars have always been one of the worst type of investment you can get into, the depreciation value starts accelerating the moment the car moves out of the showroom. Whether you drive the car or not, it will still lose value with every passing minute. When the governments of these countries imposes high taxes and duties on cars, they are basically eroding the purchasing power and allocation of resources of their citizens. Its high time the price of cars need to come down a lot further in Asia-Pacific.

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