Budget 2018 will be tabled next month, and business publications will do the usual wish list hunting. What do the captains want for the automotive industry? Here’s a small sampling, compiled by The Edge.

Barring a few on-form brands bucking the trend, auto sales in Malaysia and consumer sentiment have not been the most rosy of late, and Edaran Tan Chong Motor (ETCM) is one of the more affected companies. The long-time Nissan distributor and assembler has been hit not just by declining sales, but the depreciation of the ringgit as well.

ETCM’s executive director Datuk Dr Ang Bon Beng says the forex situation “severely affects our bottom line” and his company’s wish list for the upcoming Budget 2018 is for the government to extend “special financial packages” to help automotive players stay in the black.

“As the auto sector is a key contributor to the country’s tax revenue, we seek the government’s support by providing special financial packages, for example, in the form of higher industrial linkage ratio, which is higher tax exemption for localisation, or reducing the excise duties,” Ang said.

Industrial linkage ratio is a form of tax rebate given for the localisation of content. The current ratio is 1:1, which means that the rebate corresponds directly to the cost of parts localised. ETCM’s Ang hopes that the ratio can be doubled.

According to MIDF Research, Tan Chong is estimated to have around 80% exposure to USD imports (of total import cost), with the rest in Japanese yen. This high exposure impacts the company greatly – every negative 1% change in RM-USD rates affects FY18 earnings by 16%. The company, which has had steady earnings over the decades, is currently loss-making. This situation ties in with the wish list.

Bermaz, the distributor of Mazda vehicles in Malaysia and the Philippines, has been faring better, but still reported 50.8% lower net profit (RM20.2 million) for its first quarter ending July 31. The company has a different set of concerns from Tan Chong – compliance with energy efficient vehicle (EEV) standards and exports are what it cares about.

“Our wish for Budget 2018 is for the government to push lower-priced cars to be EEV-compliant, instead of offering incentives to premium hybrid manufacturers, who don’t help the domestic automotive industry much without any large CKD (completely knocked down) volumes,” said Bermaz executive director Datuk Francis Lee Kok Chuan, who highlighted that all Mazda models except for the BT-50 pick-up truck are EEVs.

Lee was without a doubt taking aim at Mercedes-Benz and BMW, both of which sell locally assembled plug-in hybrid models in small volumes. He suggested that more incentives be provided for “those who genuinely export cars from Malaysia to support the industry and help transform the country into an automotive hub in the region.” Volvo makes PHEVs in Malaysia too, but does export the XC90 T8 Twin Engine to Thailand.

Aside from domestic consumption, Mazda Malaysia – a 70:30 joint venture between Mazda Motor Corporation and Bermaz – produces CX-5 SUVs in Kulim for export to several markets in ASEAN, including Thailand.

“The challenge for exporters like ourselves is to bring costs down, in order to be competitive for the export markets. The regional markets are very competitive with so much protectionism by various countries,” Lee added.

Will we see incentives for the auto industry in Budget 2018? Unlikely. “Policies and incentives for the automotive industry are [usually] announced via the National Automotive Policy and not the budget. Nevertheless, any budget proposal which boosts consumer sentiment and improves Malaysians’ disposable income will support car sales,” Ang said.