The hot topic for last week was the new National Automotive Policy Review, a so-called ‘facelift’ for the National Automotive Policy that was first born on the 22nd of March 2006.

The NAP review is a disappointing one, with the prices of cars to be pretty much the status quo for a long time to come. In fact, the prices of hybrid cars are sure to go up once the 50% excise duty rebate ends. But there are parts of the NAP that have significant negative impact on us as motorists, one of which is the announcement that the import of used parts will be prohibited from June 2011 onwards.

Car companies and parts manufacturers do not survive on just selling you your car, which is a sum of parts from various OEMs. They also earn a significant portion from the sale of replacement parts, which you will inevitably need as parts are not designed to last forever. Not sure if the word greedy is justifiable but sometimes these new parts can be priced quite exhorbitantly. Which means used parts are very popular and are pretty much key to the sustainability and/or viability of keeping an old car running.

Banning the imports of used parts and the halfcuts which contain them would mean if your City’s CVT transmission dies, you are unable to source a good condition used one from a Honda Fit Aria halfcut that had been scrapped in Japan due to the country’s scrap policies. It means that when my Proton Perdana transmission finally dies and is beyond a refurbishment, a used one sourced from a Mitsubishi Eterna will not be an option – I will have to buy a 2nd hand Proton one or a NEW one, which I probably will not be able to afford as I am not the Perak or Terengganu Mentri Besar(s).

Of course, these situations will not happen right after June 2011 as there is bound to be existing stock in the country, but that will run out sooner or later. And then what? We cannibalise each other’s cars for used parts, whether willingly (scrap) or not (theft)?

And then there is the total disregard for the livelihoods of the chop shop businesses which have been run for decades and suddenly have their main source of income taken away from them. I visited a few chop shops and interviewed their owners over the weekend, curious to see how they were reacting to this piece of bad news.

One chop shop did not even know that such an announcement had been made. Danny of Soon Loi Sdn Bhd in Batu 11 1/2 Cheras said that he had been unaware that the government was planning such a thing and he and his wife was clearly in shock. I felt really bad watching their reaction. At first they were talking normally and keeping their cool but after awhile you could see they were quite emotional about it.

Their chop shop is a family business and has been running since the 70s. Danny is now the 2nd generation, taking over from his parents. He said chop shops have been around since before he was born and did not understand why the government suddenly wanted to stop the import of used parts.

The government’s justifications for this move are ’safety and environmental’ concerns. From my view I see it more as yet another way to discourage us from using our old and hardy classics, instead driving us to buy new budget cars instead of that RM20k Toyota Corolla AE101 which alot of people are much more comfortable driving as a daily driver than a new car. The common sentiment is that old cars tend to last longer and have better plastics than new cars today and in many cases I find that to be true.

According to Danny, the parts in his stock consist of over 80% overseas imports and only about 20% local parts. I asked him what was he going to do when the new rule is implemented. He said he could not do anything but to look for local cars to ‘cut’ instead of getting halfcuts from overseas.

From a consumer perspective this means certain ‘upgrades’ such as fitting a Cortina 4-speed with a 5-speed manual from a Ford Sierra would be impossible as the Sierra was never really sold here. From the chop shop owner’s perspective, business will be A LOT tougher than usual. To quote his wife’s exact words, “Mati loh!”

I tried looking for a more premium chop shop and found Happy Auto Parts in Sungai Besi which specialises in continental parts. This is near the Auto Bavaria Sungai Besi showroom. There were plenty of BMW E34 front clips there, and there was even an E39 pre-facelift front clip. The owner CM Tan also operates a workshop in the same premise so at least he has something to fall back on when his chop shop business runs dry. Being a specialist BMW used parts center, 100% of his inventory are from overseas.

CM Tan says that the business of a chop shop is not easy to do. You have to build your relationship with your overseas suppliers over a long time – this can be years and years. According to Tan, sometimes even when you find some good cars to be clipped, it doesn’t mean the overseas supplier will sell them to you. There are so many chop shops from so many countries fighting for these cars.

You also need to have a trained sharp eye to judge what cars are suitable to be clipped and he claims that with the 1 week warranty that most used parts have, the return rate for a lemon clip can be so high that you can potentially even lose money on it, or just break even.

He likened the government’s new rule to telling medical students that have given their life to training to be a doctor for many many years that they suddenly are banned from practicing medicine. He has been in this business all his life, what else can he do?

It’s really quite unfair, when you consider that in another segment of the industry, Open AP holders have gotten hints of the system being scrapped for many years now. Only when this NAP review was released have the government somewhat put their foot down and said the system will be terminated by 31st December 2015.

That’s over 5 years of lead time for them on top of the many ‘hints’ that they’ve been getting for quite sometime now, and the RM10k per AP to be charged from 2010 onwards was to go to a special Entrepreneurship Fund that will help these ex-Open AP holders diversify into other businesses.

So much lead time for these Open AP holders to move on to other things, and so much help for them to start new businesses (on top of the money they’ve been earning from the APs so far), but on the other side of the spectrum, used parts dealers only get less than 2 years! I asked both CM Tan and Danny what they would be doing now that they’ve learned about the news – would they bring in more inventory so that stocks would last longer while they figure out what to do with their lives?

They feel it is hard for them to make a decision like that as the government and/or relevant ministry has not released any hard details on how and when exactly this used parts import ban would take place.

It remains a small paragraph in a long document for now, but one that will cause them sleepless nights until the picture is made clearer for them.

Two new Volkswagen cars have been added to the Volkswagen Malaysia range – the Passat CC and the Scirocco. The Passat CC is available at the showroom today, while the Scirocco is said to be at all showrooms next week onwards.

The following are the launch prices:

• Volkswagen Scirocco 2.0 TSI – RM243,888
• Volkswagen Passat CC – RM239,888

The Passat CC’s price is a bump up from the Passat’s RM228,888.00 pricetag. The Passat CC has a 200 PS 2.0 liter TSI engine with turbocharging and direct injection but it does not use a DSG gearbox. Instead like the Tiguan it is mated to a 6-speed Tiptronic slushbox automatic. It is based on the Passat platform but with a sportier roofline (think of MB E-Class versus CLS-Class), and is 50mm lower to the ground and 30mm longer. If you need a little more in terms of looks, you can get an Abt kit.

Features are generous – 6 airbags, ABS, traction control, stability control, ISOFIX seat points, and adaptive chassis control which adjusts the suspension damping and power steering assistance characteristics to suit the driving pattern.

Look after the jump for e-brochures for both cars.

Click here to read the rest of Prices for Volkswagen Passat CC and Scirocco officially unveiled; both cars in showrooms

This is the new Naza Picanto, just launched by Naza Kia Sdn Bhd a few days ago at The Curve. Yes, this is the CKD Picanto that was previously called the Naza Suria, but now the Suria name has been dropped and replaced by the Kia name, though the Naza badge remains. The Suria name was probably inspired by the Picanto’s Korean market name, which is the Kia Morning.

The most obvious change is of course the aesthetic update to the latest look that has been available from Kia internationally. With the latest facelift in Korea, there were actually two different front ends available but Naza has picked the version with the rounded foglamps to sell here. There is another one with leaf-shaped look foglamps and funkier alloy wheels, probably some kind of special edition.

On the inside, the interior has been updated with orange backlighting for the controls and meter cluster. The meter cluster is complete with an RPM meter but there is no water temp meter. The head unit provided is a 1-DIN design with USB support so you can read your MP3 files off a USB thumbdrive and do away with carrying CDs in your Picanto. The 1.1 liter engine revs up to 6k RPM and puts out a peak of 64 PS at 5,500rpm and 96Nm of torque at 2,800rpm. I like the fact that peak torque is made under 3,000rpm, which is usually the point an automatic car would shift gears if driven gently. But in any case acceleration from 0 to 100km/h will take a long 15.1 seconds.

In terms of safety, the front passenger and driver get two airbags – one each. The airbags are only available on the more expensive EX model. None of the models have ABS. There are four 3-point belts and a lap belt for the rear center. Wheels are 14 inch steels for the LS and 15 inch alloys for the EX, wrapped with 165/60R14 and 175/50R15 tyres respectively. The EX goes for RM46,800 while the LS goes for RM44,500. If you are in the market for one I’d recommend you just go for the EX since you get alloys and two airbags for a premium of RM2,300.

Also note that the Picanto is basically the original car that the Hyundai i10 was based on, and the i10 is sold at a higher price of RM48,888 in Malaysia. But the i10 comes with ABS brakes and a 5-year warranty while from the Naza Kia website it appears the Picanto gets 2 years, though it looks like a (optional?) 2 year extended warranty program is also available. Also, the i10’s CKD packs come from India, while the Picanto’s CKD packs probably come from Korea.

Look after the jump for an E-Brochure and a gallery of the Picanto.

Click here to read the rest of Naza Picanto: latest facelift now in Malaysia

Click for enlarged image

Mitsubishi has released a sketch of a new “Compact Crossover” based on the Mitsubishi Concept-cX concept car that it displayed two years ago. Mitsubishi claims it will be a game changer for it in the European market. They say they’ve been associated mostly with SUVs in the past, mostly thanks to the Pajero and now the Outlander. The new vehicle continues to have the same family look that they’re slapping on every car they have out there including the Colt, and will be the firm’s first ‘crossover’. The new car will go on sale in Japan from February 2010 onwards, and will make its European debut at the 2010 Geneva Motor Show.

Now that most of the regional automotive manufacturing and assembly has gone to Thailand, the biggest buzzword that had been uttered repeatedly during the period where the NAP review was being formulated was hybrid cars and green technology.

So we had to shift focus. The government was quite bent on trying to get a piece of the green pie instead. Or so it seemed, there was plenty of talk in the papers. And you know what they say, supposedly in ASEAN you build your pick-ups in Thailand, your MPVs and vans in Indonesia and your passenger cars in Malaysia. That’s supposedly what kept Volkswagen interested despite flip-flop partnership decisions in the first place.

The new National Automotive Policy review offers a cocktail of R&D grants, duty exemptions, fiscal incentives to whoever invests in the assembly or manufacturing of hybrid and electric vehicles. For automakers, you’ll get 100% Pioneer Status/Investment Tax Allowance for 10 years, training and R&D grants in addition to existing grants, 50% exemption on excise duty on CKD/manufactured vehicles from the IAF.

For hybrid parts suppliers such as electric motors, batteries, Battery Management System, inverters, electric-powered air conditioning, and air compressors, you will get 100% Pioneer Status for 10 years and 100% Investment Tax Allowance for 5 years.

Even before the NAP review was announced, there was one measure that was announced leading up to these new hybrid/EV car incentives announced during the Budget 2009 last year. Imports of CBU hybrid vehicles were given an exemption on import duty and a 50% excise duty exemption. These exemptions will end on the 31st of December 2010 and the NAP review mentions no intention to extend this deadline. If you want to grab a Prius or a Civic Hybrid, you’d better do so before the end of next year, as prices on these cars are sure to go up.

The biggest blow to the government’s green dreams was the announcement that Toyota was going to setup a hybrid manufacturing facility in Thailand. One of the cars that were to be assembled is the Toyota Camry Hybrid. Toyota sells the most hybrid vehicles among all automakers and they are probably the first to setup a hybrid plant outside of their ‘home ground’. Because of their best-seller status, they are able to get the volumes to justify new investments not only in Thailand, but in Australia and soon the UK.

Even with the new lower price of RM129,980 (RM1,180 higher than the Civic 2.0S), Honda Malaysia Sdn Bhd only managed to register a total of 100 units of the new Honda Civic Hybrid in Malaysia as of July 2009, and this is the total amount registered since its introduction in our market. The numbers for the much more expensive Toyota Prius certainly will not do any better.

It looks like hybrid cars remain a niche product here despite reduced pricing and there is simply no volume for any car manufacturer to even think of setting up Malaysian assembly facilities, let alone manufacturing facilities. Unless of course you are talking about the ‘SKD’ trickery that some car companies are successfully pulling off. All Honda hybrids are so far assembled at its Suzuka plant.

The government has failed to understand that the production of hybrid vehicles cannot be simply placed anywhere a car company likes – there has to be an ecosystem of hybrid component suppliers as well. It’s a completely different chicken and egg scenario than the one the government thought was most important – pricing and acceptance of hybrid cars which they attempted to solve with the CBU hybrid car incentives that managed to bring the prices of the Civic Hybrid and the Prius down in Malaysia.

And now that Toyota – the largest seller of hybrid vehicles in the world – has placed a hybrid production center in Thailand, guess where the hybrid supplier eco-system is going to be?

The only thing we can do now is sit and wait for hybrid vehicles to take off in terms of acceptance and sales internationally. Then maybe some will come here. But that’s a big maybe. We can look at companies like Ford and GM. GM has a big base in Thailand but they’ve shown some interest in facilities here in the past. We’ve already covered how the Chevrolet Volt is simply too expensive a vehicle to make for what it is, but perhaps the next generation of GM hybrids.

Ford has also shown some improvement in its hybrid car sales – it’s hot on Honda’s heels to take the position of the #2 hybrid seller in the US from the Japanese company. But still, all of these hybrid cars from non-Japanese manufacturers are very US-centric – all medium to large SUVs pretending to be green by adding a motor-assist system in order to comply with weird CAFE systems. They won’t sell in any kind of decent numbers here, not in Malaysia, not in this region, so no reason to assemble them here. Ford Europe is relying more on diesel but the Ford Kuga will be the first European hybrid for the company.

But seriously, for any of that to happen, there will be a gap of years and years in between the end of the CBU import incentives and the introduction of the first locally assembled/produced hybrid car. Prices will shoot up skywards all over again. Hybrid cars will once again become unaffordable. When the cars are not on the road, people will be less exposed to them. Whatever low level of acceptance that hybrid cars currently have will once again go down the drain. And then the first CKD hybrid car will roll out with a decent price, with everyone being afraid to actually buy it.

Do you see what’s wrong with the picture?

Here’s the media release from MITI detailing every bit of the National Automotive Policy review. More stories on this issue to come later. By now you would probably already have seen this embedded document viewer used on this site a few times before so please use the Full Screen function for the best reading experience.

Click here to read the rest of The full NAP review text released by MITI

UPDATED: The results of the National Automotive Policy review were revealed this morning at a media conference.

The following are the updates I’ve been getting so far from various sources, this post will be updated as I get more info.

• A total of 18 new policies and measures covering licencing, duties, incentives, technology and environment, safety and standards and APs to be effective January 1st 2010.
• Open AP system to be scrapped by December 31 2015.
• AP holders will be audited twice a year.
• A gazetted Customs pricelist for used CBU cars to be established to supplement the current list of new CBU cars. This will be used to prevent underdeclaration of grey import vehicles by declaring then as “used” instead of new in order to manipulate the price, as the gazetted pricelist is currently only for new vehicles.
• A large chunk of the RM300 million expected to be collected from the RM10,000 per Open AP fee to be used to develop the auto industry and increase Bumiputra entrepreneurship participation in the auto industry.
• Import duty on CBU & CKD cars maintained.
• Import of used parts to stop in June 2011 (what???).
• Incentives and exemptions will be increased to develop local auto parts.
• Franchise APs to be terminated by December 31 2020.
• Foreign firms can apply for manufacturing licenses to hold 100% shares in firms to produce vehicles with engine capacity of larger than 1,800cc and costing more than RM150,000. This will open up the upper end of the market while keeping the lower end where Proton and Perodua are protected.
• Issuance of new Manufacturing License to be unfrozen for selected segments – hybrid and electric vehicles, pick-up trucks, commercial vehicles and motorcycles with engine capacity of 200cc and above.
• Vehicles 15 years and older will have to be tested annually for roadworthiness; provisions to be made for vintage cars.
• A new strategic partnership between Proton and an established manufacturer will be established.
• Ministry of Natural Resources and Environment to establish clear roadmap for fuel standards and quality towards Euro 4M standards to be implemented by 2011
• Automotive Development Fund and Industrial Adjustment Fund will be continued. Despite excise duty and import duty being the same across the board for all makes whether ‘national’ or foreign, cars that have a decent amount of local content as well as proof of local activities such as R&D will receive incentives from the funds. This is where national makes like Proton gets an advantage – despite an equally high excise duty, it gets rebates because its cars are developed locally. Supposedly anyone who meets the fund requirements are able to get the same incentives, but it’s safe to say only Proton has that much investment in the Malaysian auto industry.
• Exemptions on statutory income from exported goods will be increased to 30% from 10% for goods with at least 30% value-added content (I’m guessing this means local content), and from 15% to 50% for goods with at least 50% value-added content.

Group Lotus’s new motorsports ambitions will be spearheaded by its newly appointed Director of Motorsport Claudio Berro, who will report directly to CEO Dany Bahar. Both Berro and his boss Bahar are ex-Ferrari men. Berro was previously the Operations Racing Director for the Speedcar Middle-East International Race Series.

Before that, he held positions at Ferrari, Maserati and Fiat as Formula One Team Manager, Director responsible for all sport activities for Ferrari and Maserati (excluding F1), General Manager Maserati Corse and Director of Fiat Group’s Motorsport Activities, and Racing Operations Director for Abarth. So he’s definitely a man with experience.

“Lotus has a peerless motorsport heritage, not just in Formula One, but we have also won in sportscar racing, saloon car racing, world rally championships, Le Mans and the Indy 500. There is no other car company in the world which can lay claim to so many accolades and championships in such a wide variety of motorsport fields, and I am looking forward to re-introducing Lotus to high level motorsport to not only compete and win but also to demonstrate the shared technology between Lotus sportscars and future racing cars,” said Berro.

Of course, Lotus is also in Formula One, except it actually isn’t. The new Lotus F1 Team is actually run by Litespeed in terms of technical expertise.

Related Posts:
Lotsu eyeing Indy car series, GT and Le Mans

The Suzuki SX4 Sport Crossover (that’s the hatchback version, not the sedan) has been updated with new specifications in Malaysia. On the outside, the model adds auto-retractable side mirrors with intergrated signal indicators, new design 16 inch alloys, and a new front grille.

Inside, there is a new meter cluster with an integrated MID, a new design for the automatic climate control panel, armrests for the front seats, illuminated audio controls, and an additional dash center speaker and aux-in socket for the audio system.

The most significant change has been to the engine – output is now 110 horsepower at 5,600rpm and 150Nm of torque at 3,800rpm instead of the previous power figures of 101hp at 5,600rpm and 140Nm at 4,000rpm. This means the engine will now perform much better – it now makes more torque, but at a lower RPM at the same time. The 4-speed automatic remains. Other technical changes include a revised front suspension for better comfort, and the addition of ventilated discs for the rear brakes.

The car goes for RM89,998 in Peninsular Malaysia, OTR with insurance. From what I heard, the CBU Japan odd-looking “tall” sedan version can be had at some Suzuki dealerships for much cheaper under RM80k after a RM12k discount.

Nissan will be adding two more variants to its Nissan Navara line-up soon, and both of them will be manual. The two manual models will be called the Standard and the SE.

Instead of the 5-speed auto, you’ll get a 6-speed manual gearbox, which is a first in the pick-up segment in Malaysia. The engine is the same 2.5 liter YD25DDTi engine which is the most powerful engine in its segment, producing 174 PS and 403Nm of torque. The engine is intercooled and has VGT.

The list of equipment will also be a downgrade from the current LE Automatic. The xenon headlamps will be replaced by halogens, the seats will be fabric, the rearview mirrors will lose its auto-dimming function, the CD changer will be replaced with a single CD, and the 6 speaker system will be downgraded to 4 speakers.

Some plastic bits in the interior which used to have a silver finish will also be replaced by the beige interior colour. On the outside, the door mirrors will have their chrome finish replaced by body colour paint.

What the SE has over the Standard are ABS brakes and the dual front SRS airbags, which the Standard version lacks. So far no prices of the new manual Standard and SE have been released yet, but expect them to of course be lower than the RM105,800 that you have to pay for the automatic Navara LE in Peninsular Malaysia. With the equipment deleted off the Standard compared to the top of the range LE, it’d better be significantly lower!