'12-year limit on cars will leave families in debt'

Implementing a ruling which states that all cars older than 12 years are unsafe will “victimise thousands of Malaysians” who now take up to nine years to repay loan instalments on the family car, PKR said.

“It will mean that, three years after servicing their automobile debts, they will have to take another loan,” the party’s Pandan MP Rafizi Ramli said in a statement.

Rafizi, who is also PKR's director of strategy said the situation is worse for those in the lower income group who now can only afford to take loans for older cars, which are sold at lower prices.

If the ruling is implemented, he said, they will have to contine to service their loans even though their cars are deemed unsafe and illegal to use.

“This policy should only be implemented once car prices in Malaysia for the same models are comparable to those in other countries,” he said.

Rafizi, who played a key role in Pakatan Rakyat's election pledge to reduce car prices through abolition of excise tax, said the main issue is still the fact that car prices are too high.

“It is reported that car prices in Malaysia are the second highest in the world, due to the tax structure and domestic market.

“Excise taxes of 100 percent on cars drown middle to lower income families in automobile debts which are far too high.”

Such convoluted excise taxes structures allow car distirbutors to raise car prices under the guise of taxes, he noted.

If the excise tax is abolished, then there would be “healthy competition between car producers and operators, resulting in globally competitive car prices”.

‘Policy to save lives'

Deputy Transport Minister Abdul Aziz Kaprawi reportedly said on Saturday that the government is mulling a life span for vehicles in order “to protect lives”.

He was quoted as saying that this is based on findings by the Malaysian Institute of Road Safety that cars more than 12 years old are unsafe for use.

Pakatan had in its election manifesto last May promised to bring down car prices by abolishing excise tax, if it is elected into government.

Industry players said that this would adversely impact owners as it would quickly devalue their cars.

However, they gave the policy proposal the thumbs-up as a whole, saying that the market would adjust to the lower prices in a year or two.

The BN, in its manifesto, said it would reduce car prices, but not through an excise tax cut of up to 30 percent, but by negotiating with manufacturers.

It also argued that cutting excise taxes would create too big a dent in the coffers, although Pakatan countered that this would be filled by auctioning approved permits during its phase-out programme.