KUALA LUMPUR: Mercedes-Benz Malaysia Sdn Bhd yesterday quashed speculation that the introduction of the goods and services tax (GST) on April 1 will cause the prices of its vehicles to go up. The company clarified that the consumption tax will not be the sole factor in determining a price hike — if any — of its vehicles.
“I have to make this clear. Our assessment is that GST is not the sole factor in determining the price increase of our vehicles. In fact, the prices of our cars will remain after the implementation of GST.
“But this does not mean the price will stay static. The price depends on other factors such as inflationary pressures, cost aspects and to some extent, fluctuations in the exchange rate. We will continue to monitor the trend from time to time, but we don’t see any rush to increase our price just because the GST will be introduced soon,” its president and chief executive officer Roland Folger told reporters after presenting the group’s sales performance in 2014.
He said in Germany, the prices of its vehicles had remained even after the value-added tax went up to 17% in 2007 from 16% previously.
Recently, consulting firm Frost & Sullivan GIC Malaysia Sdn Bhd senior partner Kavan Mukhtyar said the implementation of GST may result in the price of premium and luxury cars increasing by between 1% and 2%.
“[The] prediction does not apply to our case. We have never raised our price by as high as 4% anyway. Even if our costs escalate, we will discuss with our vendors first to [see if we can] mitigate the situation.
“We have our strategy to manage our cost. But as a rule of thumb, we will let market forces dictate price and not simply pass any extra cost to consumers unnecessarily,” said Folger.
Earlier, Folger announced that Mercedez-Benz Malaysia saw its sales in 2014 grow 16.5% to 9,419 units in 2014 from 8,082 units in 2013, mainly due to strong sales growth in the fourth quarter of 2014 (4Q14), which surged by 46%.
Segmentally, the group saw the sales of its passenger cars rise 29% last year, while the sales of its commercial vehicles and Mitsubishi Fuso brands jumped 23% and 14%, respectively.
Globally, Folger revealed that Mercedes-Benz passenger vehicles registered a 12.9% jump in sales to 1.65 million last year from 1.46 million in 2013, on strong demand for its compact cars, C-class and S-class models.
“This year, we are targeting to create another record year of sales,” he said, adding that the group allocated another RM280 million in capital and operating expenditure over the next five years.
“We have invested RM500 million here in the last 10 years. Our investment from this year until 2019 will be channelled towards [a] manufacturing facility upgrade, product launch and enhancing [our] distribution network,” he said.
Folger also unveiled the group’s latest model, the E300 BlueTEC Hybrid, which is specifically made to cater to the Euro-2 diesel fuel quality that is currently used in Malaysia.
“More models will be introduced once Euro-5 is available nationwide,” he said, adding that the latest model has an on-the-road price of RM348,888, without insurance.
Currently, Boustead Petroleum Marketing Sdn Bhd sells the Euro-5 diesel fuel at 11 of its stations in Johor, while Petroliam Nasional Bhd recently offered the fuel at its station on the Second Link Expressway in Tuas, Singapore.
The diesel fuel, which has low pollution emission and is imported from Singapore, is currently priced at RM1.93 per litre, 10 sen higher than the usual diesel.
The government targets to offer Euro-5 fuel for RON97 petrol nationwide beginning September this year, while the rollout for Euro-5’s RON95 and diesel will begin in October 2018 and September 2020, respectively.
This article first appeared in The Edge Financial Daily, on January 15, 2015.