Car prices heading up

POSTED BY Tony Yew ON 23 October 2015

More than a month ago, we said that car prices would increase and that the only thing holding back the escalation was who’s going to start it.
We predicted that it would be a market leader like Toyota and sure enough, it was UMW Toyota that started the ball rolling.
But what was interesting was that the way UMW-Toyota timed the announcement that prices will increase from 6 per cent to 14 per cent next year.
The message was “Buy now because prices will increase next year” and it wasn’t a bluff because prices will increase next year unless world oil prices do a dramatic u-turn.
Since then, most of the mass market car companies have announced future price increases with passenger car market leader Honda saying that, all things being equal, its car prices will increase by two to three per cent
A singular exception is that of Mercedes-Benz. Just a day after the introduction of the Lexus IS 200t (2.0 litre luxury specification) at RM312,000, Mercedes-Benz cut the price of its C200 by almost RM20,000 to RM250,000. MBM said that the price decreases stemmed from Energy Efficient Vehicle incentives.
(Read Dr Max Long’s comment on this)

By Dr Max Long
The buzz these days among local automotive franchise holders and distributors seems to be to get people to buy this year by announcing that prices will increase next year.
On the surface, it looks perfectly justifiable given that the Malaysian Ringgit has depreciated some 20 per cent against the USD$ in recent months.
On the flipside, let’s face it, automotive principals are free to compete through their local chapters in Malaysia due to the “no holds barred” nature of car prices in non-national segments as long as prices don’t threaten the national automotive brands.
Added to this, some non-national cars get AFTA, CEPT and of late the NAP 2014 “customised incentives” based on EEV status, apart from the short-lived and now-expired CBU hybrid cars tax exemptions and the soon-to-be ended CKD Hybrid cars zero import tax and zero excise tax breaks.
This is where it gets interesting with regards to the premium compact executive segment which saw Lexus Malaysia up the prices of its IS model which has seen its engine downsized from a 2.5L V6 to the latest trend-bucking 2.0L direct-injected turbocharged 4-pot.
Effective immediately from its launch date early October 2015, the Lexus IS 200t is available for rm278,000 (base spec, Premium), rm312,000 (luxury) and rm345,000 (F-sport). Reason being the weakening Ringgit is putting “great impact on its operations” of UMW automotive division.
In the same vein, the more bread-and-butter Toyota line of vehicles will see increase of 6% to 14% going forward into 2016. On the sideline, Honda Malaysia announced that prices will increase by two per cent to three per cent in 2016, barring any reversal of fortune of our beleaguered Ringgit.
Almost immediately after UMW-Toyota hiked their Lexus IS prices, Mercedes-Benz Malaysia (MBM) did the exact opposite. Their popular and well-received W205 series of C200 and C250 saw price reductions across the variants at RM249k, RM253k for the C200 Avantgarde/Exclusive respectively and RM288k for the C250 AMG Line. For the record, the C200 Avantgarde was priced at RM270k (CKD) and RM286k (CBU) at launch. The C250 AMG Line was RM339k previously (CBU). MBM cited EEV incentives being passed on to consumers.
Interestingly, Infiniti Malaysia has revised their base-spec Q50 2.0t (powered by similar drivetrain as the Mercedes C200/C250) downwards by RM7k to RM239k while the mid-spec is RM275k and the Premium Sport is tagged at RM285k. To put things in perspective, the Q50 is also low-volume model that is fully-imported (CBU), just like the Lexus IS.

Meanwhile, BMW Malaysia has maintained prices of their 320i at RM240k, 320i Sport RM257k while their 328i Luxury and 328i M-sport are retailing at RM292k and RM308k respectively. Being the nemesis of Mercedes C-Class, it is unlikely that the LCI (facelift) F30 3-series, due in 2016, will see drastic upward adjustment in asking prices. It was reported that BMW Malaysia is in talks with MITI for customised incentives as well.
Audi Malaysia, in the meantime, is clearing the existing stocks of their outgoing B8 A4 1.8 TFSI at hefty discounts of up to RM52k, off the sticker tag of RM239k (CBU). It remains to be seen how the monetary exchange rate next year will affect the pricings of the latest B9 series of Audi A4.
Are these announcements of price hikes, impending price hikes and conversely price reductions to induce buying? Or intended to increase profit margin per vehicle in anticipation of lower overall sales figures in 2016? However one may read into these franchise holders’ maneuvers, for MBM’s C200 and C250 case, it is definitely good for buyers in this premium C-segment, and also for MBM to maintain the momentum for Mercedes-Benz passenger vehicles sales growth in 2015.