A prominent car blogger has panned Youth and Sports Minister Khairy Jamaluddin’s proposed Youth First Vehicle Scheme, saying that lower car prices did not mean that youths will have more money to spare.

Paul Tan said there is a likelihood that buyers will just “max out their budget with a more expensive car”.

He also pointed out how the country’s household debt levels were among the highest in the region.

“Giving fresh graduates more of an excuse to buy a new car may be bad for their financial health,” he said in a blog post.

“For example, removing RM1,000 a month off from their take-home pay means that they won’t be able to afford a house.”

Khairy last week had proposed a Youth First Vehicle Scheme, where youths earning less than RM4,000 a month could buy their first vehicle without paying tax on it.

He said such a scheme would help lower the price of the vehicle, which would be a moderately priced locally assembled car or motorcycle.

Meanwhile, Tan cited Thailand which had launched a first-car scheme a few years ago.

Thailand’s scheme, however, did not quite work as intended, leaving more than 100,000 indebted customers defaulting on their loans because they could not actually afford the cars in the first place.

“The cost of purchasing a car may have become cheaper, but the benefits of travelling with your own personal roof over your head comes with higher costs such as fuel, service, insurance and tyres,” said Tan.

He added that the first car scheme’s tax breaks cost the Thai government RM8.37 billion, according to World Bank estimates.

The Malaysian government, on the other hand, earn RM9.8 billion in car taxes last year. This comprises RM480 million in import tax, RM7,308 million in excise duty, and RM2,039 million in sales tax.

Tan had also calculated how much being able to buy a first car duty free would save a person every month in terms of monthly installments, based on a 10 percent down payment, 3.5 percent interest and a seven-year loan structure.

“We picked a few Protons, Peroduas, Hondas and Toyotas for this exercise, with the cheapest and most expensive variants of each model included to establish some kind of range.

“Looks like you’ll be able to save between RM30 to RM330 per month, based on the choices of cars above,” he said.