Friday, April 21, 2017

Comparison of car prices in Germany, UK, USA and Malaysia

Most people know that cars in Malaysia are expensive and blame it on the import duties imposed by the Malaysian Government on imported models in order to protect the local car industry. However, I am a bit curious how they came up with prices for Mercedes Benz cars imported into Malaysia as Completely Built Up (CBU) units.

Let us compare the showroom prices of the Mercedes Benz E300 Coupé  in 4 different countries including Malaysia.

Germany (Home Country): 54,740 Euros (Approx. RM 257,950)

UK: £41,025.00 (Approx. RM 230,930)
US: $52,150 (Approx. RM229,355). Considered the entry level E class in the US.

Malaysia: (CBU only) RM458,888

Interestingly, the model is cheaper in both the US and the UK. It is the cheapest in the US, and most expensive in Malaysia among the four countries. Please let me know if the specs differ for the models sold in different counties other than the side in which the steering wheel is placed.

In Malaysia, import duty = 30% for CBUS. Please note that this is on the factory price and not the showroom price.
Excise duty (1,991cc) = 80%
Sales Tax = 10%

The price seems a bit inflated even with all the taxes in Malaysia. 

However, what is surprising is that last year Mercedes-Benz Malaysia posted an all-time record sales of 11,779 units. While other auto car makers are suffering, they actually  recorded an 9% increase in sales (10,845 units sold in 2015). In fact, Malaysia has the highest sales of luxury cars in ASEAN, much higher than either Thailand or Indonesia which has much larger populations.

This is amazing when you consider that the per capita income in Malaysia was about RM36,000 in 2015. Compare that with the per capita income in the US which was about  $30,240 (RM132,965) based on the US Census Bureau in 2015. This indicates that we cannot estimate the market size on overall population size or per capita incomes. It is very important to identify and examine your target segments. 

Note: Mercedes-Benz USA also recorded the highest annual volume in the Country's history at 380,461 units sold in 2015.

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