Did you know that Malaysian Toyota Prius and Prius c buyers saved an estimated collective total of RM496 million last year in terms of import and excise duty exemptions when they bought these two hybrids? That’s just for the two Toyotas, and doesn’t include the amount in duties saved with the purchase of other CBU hybrid vehicles that qualified for exemptions, such as those sold by Honda, Nissan, Lexus and Audi.
At about half a billion ringgit, it’s a fraction of what the government earned from vehicle import duties and excise duties in 2013. It was revealed at the NAP 2014 announcement that the government earned about RM480 million from import duties and RM7,308 million from excise duties in 2013. So total income would be about RM7,788 million – RM480 million is just 6% of this amount.
With total government revenue estimated to have reached RM208.7 billion in 2013, the total import and excise duty income of RM7.8 billion represents only 3.73% of the pie.
We derived the RM480 million number based on the 1,449 units of the Toyota Prius and 6,941 units of the Prius c sold in the country last year, multiplied by the estimated import/excise duty. We simplified the calculation by assuming every unit of the Prius is the more affordable non-Luxury spec.
For the Prius, the estimated duty paid based on the difference between the duty free price and the new 2014 prices is RM73,400.52, while for the Prius c, it’s RM56,170.43.
Incidentally, these buyers would also have saved more in the form of car loan interest that would have been charged on a higher selling price brought about by the full duties. We would have also liked to calculate another set of figures based on Honda’s hybrid sales numbers, but the new prices for the company’s CBU hybrids with taxes have yet to be announced.
These are all ‘what if’ numbers, of course – if the Prius and Prius c were priced as high as the new 2014 prices in the first place, sales figures wouldn’t be as high as they were. So the amount that the government would have earned from the duties for these two cars would be lower.
But then again, TIV is pretty much constant, and if a buyer doesn’t buy a Prius, he or she would be buying a Camry or a Corolla Altis at that price point instead. So no matter what, there is a certain duty that will be earned per unit of car sold, and the government lost duties for 8,390 Toyotas.
Does a reduced need to subsidise fuel make up for lost excise duties?
The Toyota Prius and Prius c are cars that are far more fuel efficient than a similiar sized model. So, the government would be getting savings in terms of less fuel to subsidise at the pumps.
Based on data from Fuelly, the average fuel consumption for a 2013 Toyota Corolla is about 7.7 litres per 100 km (official figure is 6.9 L/100km). The average for a 2013 Prius is 4.8 litres per 100 km (official rating is 3.9 L/100km). Based on a 20,000 km per year commute (industry standard warranty mileage cap per year), this represents a savings of 580 litres per year.
Based on the June 2014 Subsidi Oleh Kerajaan note found at every fuel pump, the government subsidises RM0.71 per litre of RON95 sold. This means a Prius driver would save the government just RM411.80 every year in terms of fuel subsidies, which is really not much in the grand scheme of things when you take into consideration how much in duties the government has foregone.
Just take note that generally people who bother contributing data to Fuelly are more likely to drive in a very fuel efficient manner, which is why they are part of the community and contribute data in the first place. So these reference consumption numbers are likely to lean towards the lower side of things.
So, the exempted duties and the reduced subsidies don’t really balance out positively for the government, but does everything they do have to be “profitable” when it comes to the rakyat? And think about it – can you really put a price to a better environment?
Can you put a value to reduced emissions for a better environment?
A Toyota Prius is rated to emit only 89 grams per kilometre of CO2, while the new Corolla Altis emits 160 grams per kilometre of CO2. That’s almost half the amount of emissions, and while a Prius is stuck in a traffic jam, its combustion engine wouldn’t be running at all, helping reduce the amount of smoke that pedestrians have to breathe in.
Hybrid incentives still exist, but import duty and excise duty exemptions are now limited to locally-assembled hybrid cars from 2014 onwards. The Honda Jazz Hybrid and the Mercedes-Benz S 400 L Hybrid are currently the only cars that still qualify for the duty exemptions in Malaysia. A locally-assembled Nissan Serena S-Hybrid will enter the market soon, but stock of the duty-exempted CBU version is still available.
Hopefully, these cars will be joined by more cars that the general public can afford. The Jazz Hybrid is still the last-generation model – it’s set to be replaced by a new Jazz Hybrid soon, and this will eventually be joined by a City Hybrid. Toyota will be offering a locally-assembled Toyota Camry Hybrid this year, but that is expected to be priced close to RM200k. UMW Toyota doesn’t really have a replacement for the Prius c, which was affordable to a lot of people with its sub-RM100k price tag. It looks like the Jazz Hybrid will be the sole competitor at that price range.
Still, is the idea of more affordable hybrids in our market wishful thinking? The situation remains much the same on the electric vehicle front, but there’s some speculation coming about that import and excise duties may again be exempted for electric vehicles this coming Budget 2014, which would be beneficial to car companies who have invested in bringing in EVs like Nissan, Renault and Mitsubishi.
Electric vehicles were only introduced towards the end of the CBU hybrid incentives period, so there wasn’t really much time for the market to get to know them. They are however a more expensive proposition than hybrids, so the take-up might not be significant.