KINIBIZ Proton’s announcement that it will increase prices follows in the wake of foreign car brands including Honda, Toyota, Lexus and Mitsubishi, all of which had earlier confirmed that a price hike is on the books beginning 2016. Meanwhile, BMW, Nissan and Perodua have each said that they would consider doing the same should the situation deteriorate.

But it annoys Tiger that Proton is now jumping on the price hike bandwagon citing a weak ringgit. Proton is the national carmaker. How could even the national carmaker be affected by the currency play, when it is expected to manufacture most if not all of its components locally?

In justifying the proposal for the price hike, its chief executive officer Abdul Harith Abdullah said the price increases were seen as an industry-wide problem as hikes would be necessary to compensate for the effect of the lower ringgit.

While the ringgit depreciated by about 25 percent year to date against the greenback, its impact varies depending on the proportion of components that are imported, which is estimated to be about 30 percent.

So the question boils down to the proportion of components which are foreign made. With more than 70 percent of its car components being manufactured locally, Tiger wonders whether there is a real need for an increase in car prices.

So being the curious feline, Tiger worked out some simple calculations: Take the ringgit which has weakened about 25 percent against the US dollar, for example, every 1 percent weakness in the ringgit against the US dollar should only result in a 0.075 percent increase in cost, given that about 30 percent of Proton’s components are imported.

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This article was written by Sherilyn Goh.