Honda Malaysia has announced an immediate increase in the prices of three of its models by around 5% to 9% (depending on model and variant). The revisions apply to vehicles sold in Peninsular Malaysia, Sabah and Sarawak but apparently not the duty-free areas of Langkawi and Labuan.
There will be many who question why there is this increase when there was earlier news about ‘no increases in locally-assembled completely knocked-down (CKD) models’ during 2020. In fact, we mentioned this possibility because the ‘no increase’ only applied to the revised Open Market Value (OMV) calculation. If there is any vehicle affected by this specific issue, there will be 100% exemption on the increase incurred until December 31, 2020, the Finance Ministry assured.
Honda Malaysia has clarified that the prices have been raised due to the review to the customized incentives for CKD models. This is a different matter and it is likely that the company would have looked for ways to absorb the increases but found them to be too much and has to revise the prices.
The customized incentives are provided for carmakers that make investments to assemble some of their models locally. These incentives are very important in order to offset the production cost and high taxes so that the cars can have lower retail prices. Honda Malaysia has not given details of how the customized incentives have changed to affect their retail prices. It could be that some incentives have been withdrawn or altered, we won’t know because the government is not sufficiently transparent about the incentives it gives to each company. It is never clear if a similar basis (not criteria) is used for determining incentives. Potential investors are usually asked to come for private meetings to discuss incentives, rather than submit proposals for their investments based on an openly known set of incentives available. MITI has, however, included the criteria for qualifying for incentives in the latest NAP (shown below).
