Sime Darby Vehicle Portfolio Set For Price Hike As Tax Rates Rises By 2%

Sime Darby Bhd is poised to adjust car prices in its vehicle portfolio in Malaysia following a 2% increase in the service tax, as stated by their group chief executive officer, Datuk Jeffri Salim Davidson.

Jeffri mentioned that Sime Darby will view the tax rate hike, which will also affect other automotive players, as part of their operational expenses.

He further added that while it's likely that car prices will rise in theory, the actual increase won't necessarily just be 2% due to competitive factors and other variables at play, reports The Edge Malaysia.

In the proposed Budget 2024, the government suggested raising the service tax from 6% to 8%, effective March 1, 2024.

Additionally, Jeffri affirmed that Sime Darby has no intentions of withdrawing from its motor business in China, despite expectations of a slowdown in the country's economy in the coming years.

Leading global investment banks forecast a slower growth rate for China's economy in 2024, averaging at 4.6%, followed by a further cooling to 4.5% in 2025, compared to the 5.2% growth achieved in 2023.

Jeffri expressed confidence in China's eventual recovery, characterising the current state as a temporary downturn. He further added that Sime Darby would manage through these challenging times in China for the next one or two years.

Sime Darby Motors ventured into the Chinese market over five decades ago, initially as the exclusive importer and distributor of BMW vehicles in Hong Kong and Macau in 1972.

It has since diversified its brand portfolio to include luxury brands like Rolls Royce, Lamborghini, and McLaren, and expanded its dealership network across China with more than 40 outlets in key cities such as Shenzhen, Beijing, and Shanghai.

Previously, the Malaysian Automotive Association (MAA) stated that the high-value goods tax (HVGT), which will be imposed on luxury cars priced above RM200,000 on May 1st, would have a significant impact on the already heavily taxed automotive industry.