Covid-19 impact on our Automotive Industry

POSTED BY Kaynis Chong ON 23 March 2020

#yaminvong22 March 2020

The world has changed in just one month.
On 21 February, just a month ago, Malaysia launched its refreshed National Automotive Policy (NAP).
Today, the world, not just the automotive industry, has been stood on its head by a virus and the pandemic caused by the Covid19 virus.

There is also satellite data which shows significant clearing up of air pollution over the urban and industrialised landscape of China, South Korea and Japan due to the lockdowns, quarantine and movement restrictions. 

Going forward, what does this virus mean for Malaysia and its automotive industry? 
There are two opposing views. One says that it’s business as usual. Another which says that the pandemic will be a serious disruption of traditional businesses by Information Technology and 5G as one of the tools.

Datuk Aishah Ahmad, the President of the Malaysian Automotive Association (MAA) is optimistic that Covid19 won’t be as bad as the 1998/99 Asian Financial Crisis when the banks rejected 80 per cent of Hire Purchase proposals and the car sales dropped by 60 per cent.
“We’ve talked to our China counterparts and we share their opinion that the market will recover in the second half of the year. We’re hoping and praying that this comes true,” she said in a tele-conversation.

As a keen observer and commentator on the automotive industry, my opinion is that the virus pandemic will accelerate the disruption of many industries including that of the 150-year old car industry.

What I’m proposing is that the government use this opportunity to pluck ripe fruits for disruption; start to withdraw subsidies, grants and tax breaks for protected, import-substituting/inefficient industries and channel them to new sectors.
In the automotive industry, the local assemblers are ring-walled by tariff and non-tariff barriers to significantly protect them from new Completed Built Up (CBU) imported cars. The tariff and non-tariff barriers is also to provide employment to Malaysians and foreign workers.

In this slide into a world recession, will Malaysia take this opportunity to liberalise the Electrical Vehicle (EV) sector and allow tariff free imports of battery electric and fuel cell vehicles including commercial vehicles like taxis and buses?

The EV sector offers a whole new world of employment for IT and electrical engineering resources.

This is the new sector that needs government support across the board rather than choosing one champion like a Third National Car.

Malaysia has been on that road before and if we didn’t learn from that, than we’re like doing the same old, same old thing and expecting different outcomes.