The Ministry of International Trade and Industry has taken the Malaysian automotive industry a step backwards with a new policy that allows holders of Open APs to import any car they want, effective June 18 2007.
Previously, Open AP holders could import any cars they wanted except for models that have been assigned to the franchise AP holders, which makes sense really as the market would be messy with parallel imports by these Open AP holders damaging the sales and undercutting the prices of Franchise AP holders who have taken time and money to invest in this country with proper service centers, customer service, and etc.
We might see many special “Open AP-holder editions” of popular cars like the Toyota Wish and the BMW 3-Series, sold at a price that undercuts the franchise holders. Judging by the amount of people who bought the Wish before UMW Toyota brought it in officially with warranty and support, it looks like many seem like they do not care much about warranty.
Franchise AP holders are sure to be re-evaluating their current and future investments in the country because of this move. I do not see how this can move our industry forward other than making the few holders of Open APs richer at the expense of FDI.
I hope MITI has a very very good reason for this move. After all, it’s own Minister disagrees with the system. “To me, the entire AP system should be abolished. It goes against the World Trade Organisation agreement. This is my personal opinion although others may not agree with me,” said Datuk Seri Rafidah Aziz back in 2005 at the opening of a seminar organised by MAICCI.
UPDATE: The total amount of imported used cars however, have been restricted to 3% of total industry volume, which would mean about 15,000 units this year. The free-flow of car models allowed to be imported is also restricted to cars coming in from ASEAN countries.
“DRB group views with concern the development in relation to the issuance of unrestricted open APs especially on its luxury branded marques that we distribute and assemble,” said a DRB-HICOM spokesperson. DRB-HICOM has invested heavily in local assembly for foreign makes including Honda and Suzuki. It also imports Audi, and Mitsubishi cars.