The government will gradually reduce car prices by 20-30 percent in five years, as promised in BN's general election manifesto, said International Trade and Industry (Miti) Minister Mustapa Mohamed.

"Car prices will not be reduced (at one go)," Mustapa said in his speech at the ministry’s monthly assembly today.

NONE Prices will be reduced in accordance with market forces, he said, with the move expected to enhance the competitiveness and productivity of industry players.

Even though reducing excise duty would also directly reduce car prices, Mustapa noted that the government will not do this as excise duty contributes up to RM7 billion to the coffers.

'Serious effect on the industry'

He warned that reducing excise duty and car prices in one go would have a serious impact on the industry, which offers 200,000 job opportunities, and could lead to closure of businesses.

Mustapa stressed that it would be difficult to sell new cars as the prices of second-hand cars would also drop.

"In life, we must balance... you can't resolve one problem, making the consumer happy, but create a new problem, where unemployment (might occur),” he added.

BN in its manifesto had promised the reduction in car prices with revamping the National Automative Policy.

Mustapa also said that prices for 10 popular models of local and imported cars had been reduced by an average of 7.3 percent from last October to this month.

He further reminded Malaysians that increasing the number of vehicles on the road could lead to traffic jams and the need to build more tolled roads.

"One must remember, there will be side-effects ... it might take three hours to drive from Shah Alam to Miti” in Jalan Duta, Kuala Lumpur, he added.

Meanwhile, Prime Minister Najib Abdul Razak today reiterated the government’s promise to reduce the car prices in stages.

“As promised, car prices will be reduced in stages until 2017. Insya Allah, I will ensure that every promise is fulfilled,” he said in his latest tweet, according to Bernama .

In its pledge for the 13th general election recently, the Barisan Nasional promised to review the National Automotive Policy to reduce the price of cars between 20 and 30 per cent in stages and to raise the competitiveness of the national cars, if given the mandate again to administer the country.