Malaysia removes tax on hybrid vehicles - Honda Civic Hybrid is now UNTAXED!

With the announcement from Malaysia's government that all Hybrid vehicles under 2000cc will be exempted from the 100% import duty and 50% excise duty currently imposed on all CBU cars from China, Korea or Japan. (European cars get taxed upwards of 300% in Malaysia), speculations had run wild on the possible pricing of the Honda Civic Hybrid, the only hybrid available in Malaysia, which was previously selling at a price of RM172,000 ($50,588 USD). Thus sales expectation of the vehicle is now up 600%, from 5 cars a month to 30 cars a month.

Managing Director and CEO of Honda Malaysia Mr Atsushi Fujimoto announced the pricing after the exemption of taxes will be circa RM125,000 - RM130,000 ($36,764 - $38,235 USD), slotting slightly above the Honda Civic 2.0; well its an encouraging move that the pricing is now almost RM50,000 cheaper ($14,705 USD), this got us wandering abit, and decided to work out how much actually the Honda Civic Hybrid should be if it's not taxed.

The Honda Civic Hybrid costs $28,111 USD in Japan, and cost $23,550 USD in the states. When we did a simple reverse calculation from the initial selling price of RM172,000 ($50,588 USD), we found out that it should be RM57,500 ($16,911 USD), with firstly a 100% tax slapped onto it would've made it RM115,000, and then a further 50% excise duty which would then add up to RM172,000. Of course we're not saying that Honda shouldn't earn what they deserve for, but, what's wrong with pricing it cheapest in the Honda Civic range in view of this tax removal?

Of course, hitting the RM100,000+ price gap would've hurt the Jazz/Fit (RM108,000 or $31,764 USD) badly, as traditionally Malaysians preferred sedans. Now, they can't price it close to the 1.8ltr and 2.0ltr as well because they might think that's going to confuse consumers, they can't price it below RM100,000 as that would kill off the Jazz and the upcoming RM85k-RM90k Honda City. If they were to reduce the pricing of the Jazz and City to accommodate the Civic Hybrid, that would've cost them alot of money as these are rather mainstream vehicles everyone are eyeing on, moreover, a cheaper City wouldn't be much of a welcome for the local government as that would again hurt sales of the P brothers (Proton and Perodua)

So in the end? the removal of excise duties and import duties from the government, did it helped the people? Nope. Did it forced Honda to make more profit? Yes.