There are only two announcements made during the unveiling of the Budget 2009 yesterday that directly applies to motorists. One is a change in the road tax structure for diesel cars. Effective from the 1st of September 2008, the road tax rates for diesel cars will be changed to be the same as petrol cars.

Isuzu DmaxI am not sure whether this is really good news or not because for an owner of the Isuzu D-MAX 3.0 who previously had to pay RM1,878.10 for individual private registration (according to Isuzu Malaysia’s website) for his truck equipped with a 2,999cc engine, he now may have to pay over RM2,000 for his road tax (typical for a 3.0 litre petrol engine). Unless of course they are still keeping the significant green engine discount, then the new rates will be cheaper.

Civic Integrated Motor AssistThe other thing revealed during the budget presentation was the abolishing of 100% import duty and 50% excise duty for hybrid cars imported by franchise holders with engine displacements lower than 2,000cc.

What I like is the barriers that the government has put around this to prevent “loopholes” as it would rule out all the “luxury hybrids” out there (including the 2.4 litre Camry Hybrid and the collection of hybrid Toyota MPVs) and narrow it down to cars like the Civic Hybrid and the Prius which have small engines assisted by electric motors. Only allowing franchise holders (and not Open AP holders, grey importers) to have this tax exemption would only let genuine importers who will back their cars like Honda Malaysia Sdn Bhd.

The tax exemption will be affective from the 30th of August 2008 to the 31st of December 2010 (slightly more than 2 years). The government has also defined what is a hybrid car. It says a hybrid car should be “a vehicle with at least two different energy converters and two different energy storage systems (gasoline and electric), on-board the vehicle for the purpose of vehicle propulsion.” It should also achieve not less than a 50% increase in city fuel economy OR not less than a 25% increase in combined city-highway fuel economy compared to an equivalent vehicle with a regular internal-combustion engine. Carbon monoxide emissions must be less than 2.3 g/km.

As mentioned above, this tax exemption will only be in effect for the next 2 years. The rational given by the government is that they want to encourage local assembly of hybrid cars. Allowing cars to be brought in at prices to simulate local assembled prices for a short period of time will allow car manufacturers to gauge public acceptance of hybrid cars so that they can take into consideration local assembly.

Whether this will work or not is not known – hybrid cars are complicated things and there could be a reason why hybrid cars usually come from a centralise production center in a world. Only when the Toyota’s Hybrid Synergy Drive achieved major success did Toyota decide to set up more hybrid production centers around the world, one of which will be up north in Thailand. The others will be in Mississippi, Australia and China.

Honda Malaysia Sdn Bhd has announced that it welcomes the new “temporary” tax structure and it would be announcing the Honda Civic Hybrid’s new pricing soon. The Honda Civic Hybrid currently costs RM162,800 OTR with insurance in the Peninsular Malaysia. In Langkawi, it costs RM100,800 and RM104,800 in Labuan.