Increase in SST likely to raise car prices, says Sime Darby

 

Buyers should expect to pay more for their new ride but the price increase is not likely to have a major impact on the market, according to Sime Darby Bhd. (Website pic)

PETALING JAYA: The 2% increase in the sales and service tax (SST) is likely to raise the prices of cars but it will not have a major impact on the automotive industry, according to Sime Darby Bhd.

Group CFO Muhd Noor Abd Aziz pointed out that the new tax “applies to everybody”, including all players in the automotive sector.

“This is the cost of doing business and it is applicable to everybody,” he said at a media briefing on the group’s financial results today.

Therefore, he added, the demand for motor vehicles going forward would depend on market forces.

However, group CEO Jeffri Salim Davidson said Sime Darby does not expect the tax hike to have a major impact on the automotive industry.

“The theory is that car prices will go up by 2% but there are other factors that also come into play so it is difficult to determine,” he said.

Nonetheless, he said, the underlying demand for cars in Malaysia is still strong, so there will be an impact.

The SST rate will be raised from 6% to 8% with effect from March 1.

Sime Darby Motors, the automotive arm of the Sime Darby Group, is involved in the retail, distribution and assembly of cars.

It has a presence in nine markets across the Asia-Pacific.

On a separate note, Davidson said the global trading and logistics player will not exit its businesses in China despite its slower economic growth. China, the world’s second-largest economy, is Malaysia’s biggest trading partner.

“(Our) China (business) has been hugely profitable for many years, so now we just have to live through it,” Davidson said.

“We are managing our cost and we are doing what we can to minimise that, but we will hang in there because we believe that the Chinese economy will pick up,” he added.

Sime Darby posted a RM2.3 billion net profit for the second quarter ended Dec 31, 2023 (Q2 FY2024) against RM389 million in the corresponding quarter last year.

The group also recorded a RM15.5 billion revenue, 37.7% higher compared with RM11.3 billion in Q2 FY2023. - FMT