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  • New Malaysia excise duty regulations introduced for 2020 could see CKD car prices “rise by up to 15%”

    Last December, a news report indicated the possibility that locally-assembled cars could cost more from this year as a result of a potential restructuring of automobile duty rates by the government.

    This is now looking like a reality, if what is based on that determined in the new, publicly available Excise (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) Regulations 2019, prepared by the ministry of finance and which was gazetted on December 31, 2019, is interpreted right.

    Under the terms of the new regulations, which is now technically in force, completely-knocked-down (CKD) vehicles will be liable to pay more taxes. This is because the methodology of how the open market value (OMV) of a vehicle is calculated has been changed.

    What is OMV? Well, it is the defined final market value of a CKD vehicle ex-factory, before the government imposes excise duties on it. An assortment of components determine the OMV, and these include the cost of the CKD pack, cost of manufacturing and components as well as assembly and administration charges.

    This is different to that for a fully-imported CBU vehicle, which works on a price based on Cost, Insurance and Freight (CIF), to which import and excise duties are imposed. Excise duty is between 60% and 105% (regardless of CKD or CBU), calculated based on the car and its engine capacity, while import duty can reach up to 30%, depending on the vehicle’s country of manufacture. Vehicles from ASEAN countries are not imposed with import duty.

    The gazette adds new components into the OMV calculation. Under the new regulations, the computed value to determine duties will now take into account not just the profit and general expenses incurred or accounted in the manufacture of a vehicle, but also of its sale.

    According to a source familiar with the matter, the new way of calculating OMV, which introduces duties to the sale of the goods raises new questions and has caused confusion for OEMs and distributors.

    Previously, the OMV only took into account costs for the manufacture of a said item, but the “and sale” clause also now applies to areas such as engineering, development work, art work, design work, plan and sketch, royalty payments and license fees (patent, trademark, copyright).

    The clause 4.2 (d) widens the net considerably by including “any direct and indirect costs incurred or accounted in the manufacture and sale of the dutiable goods.” This, the source points out, is “frightening,” because the MoF/Customs did not engage the auto industry prior to the release of the gazette.

    The inclusion of this “office cost” (versus only “factory cost” before this) could potentially widen the scope significantly as it will factor in the sales and marketing costs of a particular model at the distributor level. As excise duty (which rate remains unchanged) is levied on a car’s OMV, the base price’s increase will also cause chargeable excise duties – and the final car price – to rise accordingly.

    The source said that the previous method of calculating value – ex-factory – is the more fair approach as that’s the convention. Levying a product should be just that, levying the product, he said. There’s also the question of double taxation, as car companies pay corporate income tax on their profits as well, as with all businesses.

    Another point is that the CBU fully imported vehicles continue to be taxed the same way – on the vehicle itself and nothing extra – which brings some disparity. “This is unfair to those who have invested in CKD operations in the country,” he said.

    Clearly, this move is to extract more revenue from the business of selling cars, but with this duty restructuring, the cost price of cars are set to increase, and it’s likely that car companies will pass it on to the consumer.

    Asked on the possible quantum, the industry source said: “A rough figure would be CKD cars costing around 12-15% more with this new way of calculating OMV.”

    Looking at the bigger picture from the immediate effect – which is extra revenue for the government coffers and possibly higher vehicle prices – there will be knock-on effects, aside from being unpopular with the public.

    “Higher prices will translate to lower volume for car assemblers in Malaysia, which will in turn affect employment if they decide to scale down operations,” the source said.

    “Should that happen, the government will collect less in corporate taxes, and Malaysia will lose out on investment to neighbouring countries. There will be no extra revenue for the government,” he said, casting doubt on the overall effectiveness of this move and branding it as a lose-lose scenario for consumers (higher prices) and carmakers (lower volume) as well.

    All this would go against the grain of what the ministry of international trade and industry (MITI) had intimated last year, when it said that it was considering a reduction in excise duty for vehicles as a possible way for bringing car prices down. Deputy minister of international trade and industry Ong Kian Ming had said that while a reduction in excise duty would mean less direct revenue, it would be offset by total collection due to increase vehicle sales.

    With all this, plus the added uncertainties of changing policies heading into the future (the NAP has been delayed multiple times), car companies in Malaysia looks to have a tough time planning ahead, especially those with CKD operations. How would they plan their investments if nothing is set in stone, and could or would change in an instant without sufficient notice?

    Rumours are that a few brands are already considering to pull potential investments in upgrading their CKD plants if this is to go through. Going the CBU route sounds like a simpler process, but the reality is far from it, because approved permits for imports cannot exceed 10% of CKD total industry volume (TIV), as stated by an industry observer previously.

    Observers have previously stated that the tax structure has come under review because local CKD manufacturers ‘have been known’ to under-declare the foreign content levels of the vehicles produced and ‘escape with huge profits’ as a result. Another industry observer has also noted that raising car prices will benefit local makes due to their lower price points, though it will also deter foreign direct investments into the industry.

     
  • Volvo to implement 180 km/h speed limit in Malaysia

    Volvo’s resurgence in the past decade is truly a story to be marvelled at, having gone through a successful transformative era which saw the introduction of a new range of ravishing cars, most of which are properly luxurious and powerful.

    The younger folks may not know this, but Nils Bohlin, a little-known Volvo engineer who invented the V-type three-point safety belt design some 60 years ago, has saved more lives than anyone else in the world. That’s because, instead of monetising his invention, the company chose to share the patented design to competitors in an effort to encourage mass adoption.

    Fast forward today, Volvo makes some of the most technically advanced cars from a safety standpoint, but in 2008 it also made a promise that nobody should be seriously injured or killed in a new Volvo car by 2020. It’s a bold proclamation, but there are proactive measures in place to realise that goal.

    To start, the company will impose a 180 km/h speed limit on all its cars globally, with hopes to highlight the dangers of speeding. A quick check with a representative from Volvo Cars Malaysia also revealed that the speed cap will be introduced here, although the period with which it will be enforced has yet to be specified.

    The problem with speeding, Volvo says, is that above certain speeds, in-car safety technologies are no longer enough to avoid severe injuries and fatalities in the event of an accident. Despite that, speeding remains ubiquitous and is one of the most common reasons for fatalities in traffic. “People simply do not recognise the danger involved in speed,” says Jan Ivarsson, one of Volvo Cars’ leading safety experts. Thoughts, guys?

     
  • Modenas and Kawasaki team up for assembly JV

    Following the increase of Kawasaki Heavy Industries (KHI) Japan’s stake in Malaysian motorcycle maker Modenas from 19% to 30% last year, news has emerged that Modenas will be assembling Kawasaki motorcycles soon. Although no specifics were given as to the models or capacity of the Kawasaki models likely to be assembled, we were informed by a source inside Modenas that “the business plan is still being finalised.”

    Modenas has an assembly plant in Gurun, Kedah which currently assembles a variety of Modenas rebadged models. Modenas currently sells a variety of motorcycle models, including the Dominar D400, the NS200, RS200, NS160 and V15, all rebadged from Bajaj.

    Other models in the range include the Kriss 110, Kriss MR2 and CT115S kapchais, as well as the Karisma 125 and Elegan 250 scooters. The Elegan 250 is a rebadged Kymco scooter, sold alongside the Kymco Downtown 250i.

     
  • paultan.org ACE 2020 at Setia City Convention Centre in end-March – get the best deals on your next car!

    That’s right! After the massive success we had with the paultan.org Premium Auto Car Expo (PACE), this year we’re introducing a new sales-driven car expo for more affordable mainstream brands, called the Auto Car Expo (ACE). It’s happening on March 28 and 29 at the Setia City Convention Centre and trust us, you won’t want to miss this one.

    That’s because the list of brands participating is vast and includes Honda, Hyundai, Mazda, Mitsubishi, Perodua, Peugeot and Volkswagen – and we’re in the midst of signing Proton. We’ll also have two of the biggest premium brands, BMW and Mercedes-Benz, to showcase their wares alongside them.

    As usual, you’ll be able to drive and purchase your ideal car – new or pre-owned, we’ve got you covered, and you’ll be able to take delivery in time for the Hari Raya Aidilfitri festivities. Not only will you be able to enjoy irresistible promos from brands present at the show, you’ll even be able to mingle with us, the writers!

    And that’s not all – you’ll also enjoy attractive offers from paultan.org on top of the aforementioned promos. We’re giving away a goodie bag worth RM1,100, including a RM500 V-Kool tinting voucher, a RM300 Dodomat voucher and a RM300 SunUp Healthcare voucher for Recaro and Chicco child car seats. There will be more great gifts to come, so stay tuned.

    We’ll be announcing more details of the event as we get closer to the dates. Are you excited yet? We know we are, and we can’t wait to see you there!

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  • 20-year concession extension for PLUS Malaysia a positive trade-off; 18% discount still viable – report

    It appears that the government’s decision to not sell PLUS Malaysia could likely help put a lid on inflationary pressure on transportation costs, The Star reports. The agreement, according to Sunway University economist Professor Dr Yeah Kim Leng, is part of a plan to not burden the public with cost-of-living pressure caused by toll increases.

    The professor also added that toll rate increments are supposed to take place once every few years under the original concession, but the 20-year extension, which lengthens PLUS Malaysia’s revenue cycle, was a trade-off so the company could reduce toll rates by a minimum of 18% without losing the ability to maintain its highways.

    “It is not expected to be a big issue because the toll collection is still more than sufficient to pay the maintenance costs. According to some estimates, maintenance costs only make up about 10% to 25% of the concessionaire’s total costs,” Dr Yeah explained.

    As you may know, UEM Group (a subsidiary of Khazanah) holds a 51% share in PLUS Malaysia, while the remaining 49% is owned by the Employees’ Provident Fund (EPF). Naturally, there are concerns that the potential decrease in toll collection could lead to smaller payouts for EPF, but Dr Yeah disagrees.

    “PLUS is a profitable and matured asset. It is good for it to remain indirectly in the hands of the government, especially because EPF contributors are members of the public,” he said.

    Socio Economic Research Centre executive director Lee Heng Guie also welcomed the move to reduce toll rates. “It is good news at a time when we have to cope with the rising cost of living. I believe the government has weighed all the options and considered the rakyat’s welfare,” he said.

    The CEO of Institute for Democracy and Economic Affairs, Ali Salman chimed in on the matter, adding that a transparent divestment process must be in place before the government engages in the privatisation of its assets. “It is imperative on the part of the government as guardian of national assets to produce and communicate a comprehensive divestment policy framework. The framework should also fully consider the implications of government-linked companies reforms, which may entail asset sales, to the broader socio-economic dynamics,” he said.

    Meanwhile, finance minister Lim Guan Eng recently announced that the government will continue freezing the increase on toll fares across the country this year, but told reporters that the move would cost RM1 billion in compensation to concessionaires.

     
  • REVIEW: 2019 Honda CBR650R and CB650R – inline-four middleweights for every rider, from RM43,999

    Inline-fours, the iconic engine layout for what most people would call a ‘superbike’, have been with us for over forty years now. At one time, anything with four pots and overhead cams was a superbike, to be admired and respected, like the 2019 Honda CBR650R (RM45,499) and CB650R (RM43,499) on review with paultan.org.

    But with advances in material and engineering technology, it is easy enough to get enough power from two- or three-cylinders, with the associated weight savings and handling benefits. After all, if your engine configuration is not as wide as a five-barred gate, the bike becomes nimble and easy to handle.

    However, there is something about the silky smoothness of an inline-four mill dropped into a motorcycle frame. The author cut his teeth on one and truth be told, the engine layout missing from his personal stable is an inline-four since the sad demise of his Honda CB750K.

    Lots of Vees, in two- and four-cylinder format, a couple of triples, some singles. But no inline-four with the closest the trigger came to being pulled was for the BMW Motorrad S1000RR last year.

    So, to redress the situation, Boon Siew Honda, after letting us have the pair of CBR1000RRs, let us ride the CBR650R and CB650R for an extended period. Here’s what we thought about Honda’s four-cylinder middleweights.

    Read the full review of the 2019 Honda CBR650R and CB650R after the jump.

     
  • January 2020 week 3 fuel price – RON 97 down 9 sen

    Time once again for another weekly fuel price update, and for the coming week, RON 97 petrol will be priced at RM2.53 per litre, which is nine sen less than RM2.62 per litre of last week.

    As the petrol subsidy programme (PSP) has been postponed, RON 95 petrol will continue to be set at the fixed ceiling price of RM2.08 per litre. The same goes for Euro 2M diesel, which stays at RM2.18 per litre, while Euro 5 diesel – typically 10 sen more – remains at RM2.28 per litre.

    According to the finance ministry, calculations from the Automatic Price Mechanism (APM) show that RON 95 petrol would be priced at RM2.23 per litre and Euro 2M diesel at RM2.33 per litre if there were no price caps in place. It added that for the period of January 18 to 24, the government will absorb a total of RM74.70 million to subsidise these fuels.

    These prices remain effective until January 24, when then the next update for fuel prices is made. This is the third edition of the current weekly fuel pricing format for the year and the 54th edition in total since its introduction, with runs from Saturday until the following Friday.

     
  • BMW M delivered 135,829 cars in 2019, outselling Mercedes-AMG – new M3 and M4 to debut this year

    Recently, the BMW Group and Mercedes-Benz released their sales performance figures for the 2019 financial year, which saw the latter edging out its close rival (with sales from its Mercedes-Benz Vans division taken into account) by a certain degree.

    However, it was BMW that secured the lead in the performance/high-performance car segment. According to figures released by the carmaker, its BMW M division managed to deliver a total of 135,829 cars in 2019 – a 32.2% increase from 2018 – marginally outselling Mercedes-AMG which only managed to sell 132,136 cars.

    “We are very proud of the fact that we have been able to acquire market leadership in the performance/high-performance automobile segment for the first time in the almost 50 years of the company’s history,” said Markus Flasch, CEO of BMW M GmbH.

    The encouraging result is largely backed by what the company calls an “unparalleled model offensive,” with models like the X3 M, X4 M, M8 Coupe and M8 Convertible as well as their respective Competition variants being introduced.

    In terms of markets, the United States of America was BMW M’s most important, with 44,442 units sold there. This is followed by Germany (26,110 units) and the United Kingdom (17,688 units). The company also stated that sales of M Sport packages achieved a new record high in the 2019 financial year, with almost a million vehicles being delivered with said package within the course of a year (a 25% jump from the 2018).

    Beyond the sales talk, BMW M also included a small snippet in its release that confirms the debut of the new G80 M3 Sedan and G82 M4 Coupe this year, although a more precise data wasn’t provided.

    Referring to an earlier report where we spoke to Flasch at last year’s BMW M Festival in South Africa, the new M duo is said to pack a new S58 turbocharged inline-six engine. The mill is said to deliver 480 hp in standard form, or 510 hp in Competition models, and will be available with either a manual or automatic transmission. All-wheel drive will also be a first for both models, with a system that isn’t unlike that found in the F90 M5, where drivers are able to switch between all-wheel drive and rear-wheel drive on-the-fly.

     
  • Toyota invests US$394 million in flying car company

    Toyota recently announced it has invested US$394 million (close to RM1.6 billion) in Joby Aviation, an aerospace company that is developing and commercialising an all-electric vertical take-off and landing (eVTOL) aircraft.

    Aside from the significant sum invested, which makes Toyota the lead investor in Joby’s USD590 million Series C financing, the carmaker will also share its expertise in manufacturing, quality and cost controls for the development and production of Joby’s eVTOL aircraft.

    According to Joby’s website, the vehicle is a four-passenger air taxi that is capable of hitting speeds of up to 322 km/h and travel more than 241 km on a single charge. It is also touted as being “100 times quieter than conventional aircraft during takeoff and landing, and near-silent when flying over.” Other plus points mentioned include low operating and maintenance costs as well as enhanced safety features.

    Toyota has the collaboration reflects its recognition of the long-term potential of the urban air mobility market to meet the evolving needs of society. “Air transportation has been a long-term goal for Toyota, and while we continue our work in the automobile business, this agreement sets our sights to the sky,” said Akio Toyoda, president and CEO of Toyota Motor Corporation.

    “As we take up the challenge of air transportation together with Joby, an innovator in the emerging eVTOL space, we tap the potential to revolutionize future transportation and life. Through this new and exciting endeavor, we hope to deliver freedom of movement and enjoyment to customers everywhere, on land, and now, in the sky,” he added.

    Meanwhile, JoeBen Bevirt, founder and CEO of Joby Aviation, commented, “this collaboration with Toyota represents an unprecedented commitment of money and resources for us, and for this new industry, from one of the world’s leading automakers.:”

    “Toyota is known globally for the quality and reliability of their products driven by meticulous attention to detail and manufacturing processes. I am excited to harness Toyota’s engineering and manufacturing prowess to drive us toward our dream of helping a billion people save an hour (or more) commuting time every day,” he added.

    This isn’t the first time Toyota has invested in a flying car company, as back in 2017, it provided 42.5 million yen (about RM1.5 million) to Japanese startup Cartivator to develop its SkyDrive eVOTL two-person multicopter.

     
  • Next Nissan Z to feature ‘heritage-inspired’ design

    The next-generation Nissan Z will wear a look that harks back to familiar look from Z models past, Autoblog was told by a source, who has seen an early version of the forthcoming sports car at dealer meetings. The forthcoming sports car’s silhouette and overall shape will be similar to that of the current 370Z/Fairlady – the unit seen here running laps of the Nurburgring is a mule – but its front and rear ends will be redesigned.

    The new car’s front end is said to mimic that of the 240Z with a squared ‘mouth’ and headlights that are almost round in shape, while its tail lamps are to follow the design of those on the 1990s 300ZX. The next Z-car will also follow in the footsteps of the 300ZX in employing a turbocharged engine, though the new car does so likely as much for emissions regulations compliance as for outputs and performance.

    This will be the 3.0 litre biturbo V6 that has served in the Infiniti Q50 and Q60 Red Sport, sources told Autoblog. Where this engine was paired with a nine-speed automatic transmission in the Infinitis, the sources also said that the automatic will be offered alongside a manual transmission. Nissan has in fact put the 3.0 litre biturbo V6 into the 370Z with a manual gearbox, albeit only as a one-off for the SEMA show in 2018.

    A performance-focused Nismo version of the next Nissan Z will eventually join the line-up of versions for the next-generation car eventually, the sources told Autoblog, and a 500 hp ballpark figure is expected for this top-shelf variant. Inside, the next Nissan Z will get a thoroughly redesigned interior compared to that of the 370Z, where it will receive the manufacturer’s latest in design language and infotainment technologies.

    For fans of the Nissan Fairlady/Z two-door, a comprehensive update of the sports car has been a long time in the making; the 3.7 litre naturally aspirated car made its debut in 2009. They’ll have a bit longer to wait, however, as its successor isn’t due for another one and a half to two years, Autoblog says, adding that Nissan “has plans to introduce 12 new products in the next 20 months.”

    With the revival of the Toyota Supra nameplate, Nissan will surely want to get a slice of that modernised Japanese performance nostalgia pie – even if it already has the GT-R playing in a rather more elevated level of horsepower and performance. Looking forward to a new Fairlady, folks?

    SPYSHOTS: Nissan 370Z development mule

     
 

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Last Updated 11 Jan 2020



 

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