Upgrade incentive

Rebate incentive

THE idea of offering trade-in deals to encourage the owners of old bangers to buy new vehicles was mooted in 2007, to a somewhat more favourable response among car-owners than car-makers or dealers. If anything, the parallel notion that vehicles more than 15 or 20 years old should be taken off the roads entirely elicited more protest -- owners of vintage autos or beloved old boneshakers made up for their relatively small numbers with mighty dudgeon. The resurrection of the initiative now seems to have been informed by the earlier experience. Although the proposed RM5,000 "rebate" on purchases of new cars -- in reduced excise duties and other tax mechanisms, as opposed to cash refunds -- will be indeed an incentive to remove older vehicles from the roads, and should also appease consumers facing the squeeze of a leaner economy, its primary effect will be to help the car industry.

With vehicle sales in this country slumping 17.5 per cent last year compared with 2007 -- before the economic recession really began to bite -- the prognosis for the sector this year cannot be good. The overall decline was artificially eased by an only marginal reduction in commercial vehicle sales, which declined to 3,478 new units sold from the previous year's 3,564 -- just 86 fewer. This helped mask a precipitous 18.8 per cent decline in passenger-vehicle sales, the sector most directly targeted by the present proposal.

This time, Proton may not be the only manufacturer to accept the proposal, which was coolly received two years ago by the other car companies operating here. Of course, whatever conduces to keeping the national car-maker's production lines running would be well received by the corporation. The company's spirits remain buoyant since posting a RM52 million profit for the first quarter of 2008 on the popularity of its new Persona and Saga models, an impressive turnaround from losses of nearly as much in the corresponding period the year before. Early orders for the new Exora multi-purpose vehicle also seem encouraging, allowing Proton to view prospects at least for the rest of this year, if not the next, with some cautious optimism. Hopefully, the canny timing of this proposed trade-in rebate incentive will help secure those prospects, even as it takes some of the sting away from these leaner times for people wishing to continue enjoying that unique aspect of the good life that smells like a new car.