KUALA LUMPUR: The impending increase in sales and service tax (SST) to eight per cent from six per cent is expected to affect the prices of new vehicles disyributed by Sime Darby Bhd, said its group chief executive officer Datuk Jeffri Salim Davidson.
While the new service tax rate will not directly affect car prices, Jeffri highlighted that it would have an impact on the prices of car components by two per cent.
"There's going to be six to eight per cent extra tax. So I guess that car prices will be a little bit more expensive and the demand should reduce a little bit.
"We have other factors that come into play so it is difficult to say the profit is two per cent. I am not sure if there'd be a massive impact," he told reporters at Sime Darby's second quarter (Q2) ended Dec 31, 2023 results briefing here today.
Sime Darby does not deny that it will increase its car prices after the tax hike, but "like other automotive companies, it is closely monitoring the situation and will adjust its pricing strategies accordingly".
It expects the industry volume to decline in the near future with the higher SST, implementation of proposed high-value goods tax and targeted petrol subsidy rationalisation in the later half of the year.
Meanwhile, Sime Darby group chief financial officer Muhammad Noor Abd Aziz said the company is on track to finalise its acquisition of a 100 per cent stake in UMW Holdings Bhd by March 2024.
The company is in the process of integrating the acquired companies and exploring synergies across their operations.
"We are excited about this transaction as it is a landmark for Sime Darby, allowing us to strengthen and scale up our automotive business and diversify our earnings both geographically and across segments," he added.
Sime Darby's net profit surged to RM2.29 billion in Q2, thanks to a RM2.0 billion gain on the disposal of Ramsay Sime Darby Health Care in December 2023.
Sime Darby reported a net profit of RM389 million a year ago.
The company's revenue was up 37.7 per cent to RM15.55 billion from RM11.29 billion a year ago.
For the cumulative six months ended Dec 31, 2023, Sime Darby's net profit jumped to RM2.88 billion from RM596 million, on the back of a revenue of RM29.53 billion, versus RM23.47 billion for the same period in financial year 2023.
Sime Darby announced an interim dividend of three sen per share for the first half of the financial year 2024.