Frump with the XC60.
KUALA LUMPUR: Volvo Malaysia hopes that the soon-to-be-implemented High-Value Goods Tax (HVGT) will be given careful consideration to ensure that the luxury tax does not undermine concerted efforts to encourage Malaysians to switch to electric vehicles (EVs).Managing director Charles Frump said the Swedish carmaker is still awaiting details on the luxury tax, which, if it affects EVs, would be a step back from the current incentives for EV adoption.
"At the moment, the incentives are a good start to encourage adoption of EV cars, but at the same time, EVs currently trend closer to the premium and luxury segment compared to petrol cars based on their retail price,” Frump told a group interview on Volvo Car Malaysia's 2023 sales performance recently.
He also highlighted that consumers have less motivation to make the switch to EVs given the country’s low petrol prices, whereas other markets see a big enough difference in fuel prices (petrol versus EV) that it makes economic sense.
"Since there are conversations on the introduction of differentiated petrol subsidies for different income brackets, the announcement might spark the interest towards EV adoption,” Frump added.
On Nov 2, 2023, the government announced that the HVGT will be imposed at a rate of 5.0-10.0 per cent for big-ticket items such as private jets, yachts, jewellery and luxury cars starting May 1, 2024.
However, the government has yet to announce the tax mechanism, goods covered and tax rates, as it is still finalising details.
There will also be thresholds for the application of the tax, such as cars priced above RM200,000, watches priced more than RM20,000, and jewellery worth RM10,000 and above.
On EV incentives, Malaysia currently offers exemptions on excise duty, sales tax and import tax for locally assembled EV components until 2027; exemptions on import and excise duty for fully imported EVs until 2025; and a full tax exemption for EV charging equipment manufacturers until 2032.
Meanwhile, commenting on Volvo Malaysia’s EV segment, Frump said that he is upbeat about the company’s sales performance this year, driven by the incoming smallest sport utility vehicle, the Volvo EX30.
"We didn’t launch any product last year, and I would say despite being in a bit of a product lag with no new products last year, we were happy to defend our share in the small, medium and large SUVs segments,” he said.
Volvo Car Malaysia concluded the 2023 calendar year with a higher sales mix of its fully electric (BEV) segment, which accounted for 18 per cent of its total retail sales and represented an increase of 37 per cent year-on-year (y-o-y).
The automaker’s Recharge range, which includes BEVs and plug-in hybrids (PHEV), made up 71 per cent of its total retail sales for the year.
Last year, Volvo Car Malaysia sold 2,694 cars in 2023 compared to 3,194 in 2022, which was a bumper year for the automotive industry following the full lifting of the Covid-19 pandemic’s social distancing and operating restrictions, coupled with numerous government incentives to kickstart the local economy.
Worldwide, Volvo Cars had set a new sales record with 708,716 cars sold in 2023, an increase of 15 per cent y-o-y - a demonstration of Volvo Cars’ strong electrified product portfolio in combination with a more stabilised supply chain.
Volvo Cars also saw a significant increase in sales of its electrified cars last year, selling 113,419 fully electric cars (an increase of 70 per cent y-o-y), and 152,561 plug-in hybrid cars (a 10 per cent increase y-o-y).
Sales of fully electric cars accounted for 16 per cent of all Volvo cars sold globally during 2023.
