Still no replace on OMV/402 subject in Dec, CKD value improve in Jan 2026 unsure – Mercedes-Benz M’sia – A-Z Eventz

Remember the open market worth (OMV) excise obligation revision quandary that crops up yearly finish, threatening value hikes for CKD domestically assembled automobiles and bikes if the federal government doesn’t give yet one more deferment? We’re right here once more, within the remaining month of 2025 and with no replace in sight. The deferment expires in January 2026.

At yesterday’s launch of the Mercedes-Benz GLC 200, we requested Mercedes-Benz Malaysia (MBM) if costs of their CKD automobiles will shoot up come January 1, 2026, and so they flatly mentioned that they haven’t any updates on the matter.

“We’re anxiously waiting for it. Once we have the confirmation, we’ll share it. You’ll see it (price change) from January 1 if there has been any communications. For now, what you see is what you’ll get,” Nadzir bin Ab Razak, MBM’s head of product administration and planning mentioned. By the best way, the corporate has ready a brand new value record based mostly on modifications to the OMV coverage, as they’ve finished for a number of years now.

MBM is among the many OEMs which have native meeting operations in Malaysia, and if they’re nonetheless at nighttime, we will assume that different carmakers too are but to listen to from the federal government about one other deferment, or higher but, a everlasting answer to keep away from a déjà vu each December.

When saying that the auto business secured a one-year deferment for 2025, Malaysian Automotive Association (MAA) president Mohd Shamsor Mohd Zain mentioned in January that the impact of OMV/402 might be a median value improve of between 10% to 30% for CKD automobiles, which might result in decrease gross sales and quantity, affecting carmakers and suppliers negatively.

“We are very involved. Based on our understanding proper now the 402 might be carried out by January 2026. If that basically occurs, there might be a median value improve of between 10% to 30% for CKD automobiles.

“If that (OMV revision) happens, there will be a lot of spiral down effects for the future years, in terms of lower sales, lower volume, especially for CKDs. It will also have an impact on our local industry, especially our suppliers. There’s a lot of after effects that we’re concerned about,” Shamsor mentioned then, earlier than Malaysia Automotive Component Parts Manufacturers (MACPMA) and Motorcycle and Scooter Assemblers and Distributors Association of Malaysia (MASAAM) weighed in.

What’s this OMV/402 subject all about once more? Here’s an explainer on the bullet we’ve been dodging for years, and the way we received right here. The controversial ‘402’ – gazetted on the final day of 2019 – stipulated a brand new methodology of calculating a CKD automobile’s OMV, which influences how a lot tax is to be paid and due to this fact, its promoting value. OMV is outlined as the ultimate market worth of a CKD automobile ex-factory, earlier than the federal government imposes excise duties on it.

It’s primarily made up of the price of the CKD pack, value of producing and elements in addition to meeting and administration costs. Note that fully-imported (CBU) autos use a unique system – costs for these are based mostly on Cost, Insurance and Freight (CIF), on which import and excise duties are imposed.

The PH-era rules set that in calculating OMV, one should have in mind not simply the revenue and basic bills incurred or accounted within the manufacture of a automobile, but additionally of its sale. It was this ‘sale’ clause that received business gamers up in arms, as a result of it concerned areas resembling engineering, growth work, artwork work, design work, plan and sketch, royalty funds and license charges (patent, trademark, copyright). Think of it as ‘factory costs’ plus ‘office costs’.

The rules had been supposed to come back into power in 2020, however 22 days into that pandemic 12 months, MAA introduced that the finance ministry had deferred implementation to 2021. By end-2020, it was deferred once more, and MAA appealed to the federal government in 2022 for continued deferment, which was profitable – a two-year deferment was granted, till December 31, 2024. The newest deferment is till December 31, 2025.

As you may think about, this uncertainty isn’t good for a corporation’s planning, forecasting and operations. Without readability, investments may also be hampered – nobody desires to spend money on native manufacturing and ‘live on the edge’ each December hoping for the very best. No exaggeration right here – the second deferment was introduced simply two days earlier than 2021 ended!

If costs of CKD automobiles do go up by as a lot as 30%, maybe OEMs won’t trouble with the trouble of native manufacturing and simply usher in CBU imports – this is able to be a loss for the business and nation. Yes, the federal government would acquire extra taxes with the revised OMV within the brief time period, but when larger costs injury gross sales quantity (all-time excessive in 2024, we now have momentum), manufacturing and finally job alternatives for the rakyat, it may very well be an instance of being penny-wise however pound-foolish.

Perhaps the following administrations after Pakatan Harapan do see the logic behind the auto business’s argument, therefore the fixed stays of execution, however kicking the can down the highway by way of annual deferments certainly isn’t the best way to go.

Earlier this 12 months, the finance ministry mentioned that “MoF, together with MITI and the automotive industry, is currently reviewing the vehicle valuation method to ensure that the imposition of tax is carried out in a fair, neutral and consistent manner”. Fingers crossed, once more.

We additionally requested MBM president and CEO Amanda Zhang for updates on Malaysia’s transfer away from ‘Customised Incentives’ to a hard and fast and fairer incentive system for the automotive business. It was imagined to have occurred in October, and MITI mentioned in September that it was finalising the New Customised Incentive Mechanism.

It’s nonetheless within the works. “I’m actually very much involved with a lot of the discussions with the ministries. Right now, we’re in the process of negotiating a free trade agreement between the EU (European Union) and Malaysia, so there are a lot of discussions happening,” Zhang mentioned.

“We enter this market, we now have to simply accept additionally the arrange as it’s. In the present system, a number of the incentives are finished based mostly on particular person foyer, and I feel the Malaysian authorities has additionally realised, and are going ahead with better transparency. So, I can’t say truthful or unfair because it is dependent upon every OEM’s contribution to the nation.

“But going forward, we know that the policies will bring more transparency to the surface, so it really depends on our investment in the country to come to the respective incentives that we can get,” she added.

Looking to promote your automobile? Sell it with Carro.