Bermaz Motor, the distributor of Mazda vehicles in Malaysia, has earlier confirmed that it is absorbing the 10 percent Sales and Services Tax (SST) that is coming into force this 1-September. The company has since sold out all its stocks during this interim tax-holiday period.
While the Malaysian government has yet to confirm the specifics regarding the implementation of the 10 percent SST for new cars; i.e. whether the tax will be imposed at point of vehicle delivery to customer or at point of transferring the vehicle from the distributor to the dealer; Bermaz has confirmed that it will absorb the SST for all bookings made before 1-September.
In a monthly investors’ report, analysts at RHB Research Institute estimate that the move to absorb SST will cost Bermaz some RM23 million. That’s a big sum and being a public listed company (BAUTO MK), shareholders will understandably have some concerns.
However in its latest report, RHB has reiterated its Buy call for the stock, on grounds that the added cost will be mitigated by a reduction in dealer incentives, as well as marketing and advertising expenses. The research house also expects less volatility in sales of Mazda vehicles after September compared to other brands.
RHB expects Bermaz to have a backlog of about 5,000 cars by 31-August, and bottlenecks at its production plant in Kulim (CX-5 and Mazda 3) also means that it could only deliver between 1,000 – 1,100 cars per month.
The report also added that the increase in the number of Mazda vehicles on the road will add to better revenue contribution by its after-sales operations.
Earlier last week, Bermaz launched the facelifted Mazda CX-3. Imported from Japan, the new crossover now sells for RM123,788, which is about RM3,000 less than before despite gaining more features and better refinement. A new Mazda 6 will also follow later this year.