PETALING JAYA (Nov 3): Bermaz Auto Bhd (BAuto), which is expecting improved quarters ahead following the extension of sales and services tax exemption for vehicles till June 2022, said on Wednesday that the global chip shortage situation will have minimal impact on the group.

This, said BAuto executive chairman Datuk Seri Ben Yeoh Choon San, is because the bulk of BAuto's vehicle sales are driven by completely-knocked-down or CKD cars, which make up about 70% of its sales, while the chip shortage affects completely-built-up or CBU cars more, as the latter have better connectivity and rely on the use of more electronic chips.

According to Yeoh, the group’s vehicle sales improved to four digits last month and he is hopeful the growth momentum will continue in the following months, with the coming festive season and the reopening of more economic sectors that will spur recovery.

Yeoh, who was speaking to reporters after BAuto's launch of new Peugeot models here, also said the recent supply challenge for the group's vehicles that arose from low inventory was caused by the temporary manufacturing plant stoppage during the lockdown period.

He is expecting the situation to be resolved soon, as the group has resumed full operations at its manufacturing plants. “Because 70% of our sales are from completely knocked down (CKD) cars operation, when the plant is subjected to a lot of shut down as a result of the pandemic, then we are under pressure here in terms of inventory,” he said.

The group is targeting to lessen the waiting period for the delivery of new cars to one week, from one month currently. As for the group's CBU cars, Yeoh said the waiting list for car delivery is about two months due to the global chip shortage.

Meanwhile, the latest data from the Malaysian Automotive Association (MAA) showed that 44,275 vehicles from all marques were delivered in September 2021, up 153% from 17,500 vehicles delivered in August 2021.

For Mazda, which is solely distributed by BAuto in Malaysia, 814 cars were sold in September and 703 cars in August. Cumulatively, BAuto managed to sell 7,114 Mazda cars between January-to-September period.

BAuto's net profit for the first quarter ended July 31, 2021 (1QFY22) dropped 84.64% to RM10.27 million from RM66.83 million in the immediate preceding quarter of 4QFY21, as revenue halved to RM320.79 million from RM641.20 million, amid lower car sales due to lockdown measures.

The group said there was minimal sales volume from its domestic operations in June and July due to the full lockdown under Phase One of the National Recovery Plan, under which showrooms were not allowed to operate for those two months.

“In addition, the preceding quarter's sales volume was exceptionally high, as consumers were rushing to buy new vehicles in the new calendar year 2021 and before the expiry of the SST sales and service tax (exemption) in June 2021,” it noted.

The SST exemption, which was later extended till Dec 31, 2021 and then again to June 2022 under Budget 2022, is 100% for locally assembled or CKD passenger cars, and 50% for imported or CBU passenger cars.

Still, compared to a year ago, BAuto's 1QFY22 net profit has climbed 11.05% from RM9.25 million in 1QFY21, despite revenue dropping 28.54% from RM448.89 million, thanks to a lower share of loss from one of its associate companies — Mazda Malaysia Sdn Bhd. Higher profit contribution from domestic operations that came on the back of the group’s cost-saving measures also helped lift its bottomline.

Yeoh also welcomed the government's EV tax exemption initiative, saying this would drive the country towards its carbon neutral goal and boost the development of EV vehicles. Announced under Budget 2022, EV vehicles will be given a full exemption from import duty, excise duty, sales tax, as well as road tax.

However, Yeoh does not expect the tax exemption to spur EV sales in the short term, as the initiative is seen to have a more direct impact on luxury car makers that have a ready line-up of EVs.

“A lot of critics would say this EV programme will be for the rich, as the cost of complete subsidy, including the initiative to support buyers for EV, would be at least RM150,000,” he added.

Still, he is positive on the step, which he believes will drive a change in the industry and give opportunities to those who think green and create a supporting sector for EVs.

“All of us (car manufactures) at some point in time will introduce some EV products to acquire the technology, knowhow and to upskill our human capital to prepare for the next generation of vehicles. If you look at the next generation of vehicles, they are all technology-driven, with connectivity applications. So, there is a new skill-set required,” he added.

BAuto shares closed 2 sen or 1.3% higher at RM1.58 on Wednesday, for a market capitalisation of RM1.84 billion.