Perodua plans to absorb SST payment for spillover orders

KUALA LUMPUR (Jan 31): Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is prepared to absorb the sales and service tax (SST) for customers who will not receive their orders by March 31. 

Perodua president and chief executive officer Datuk Seri Zainal Abidin Ahmad said that to date, there are about 15,000 to 20,000 outstanding units of vehicles booked before June 30, 2022, which are entitled to SST exemptions. 

During Perodua’s 2023 outlook media conference on Tuesday (Jan 31), Zainal said that “there will definitely be spillover” as Perodua had difficulty in delivering the outstanding units in time.

“Customers are very important. It is our problem that we cannot deliver [the units] by March. That is why we have to honour them,” he told the press here.

Zainal said Perodua is expected to shoulder a cost of RM45 million in SST payment, based on an estimated 15,000 units of vehicles yet to be delivered.

“I do not have the total number of units yet. We will have to wait until the end of March, but we will make sure they enjoy their SST exemption,” he said, indicating that the Bezza variant had the highest number of units on the waiting list. 

However, he said that on a positive note, Perodua’s order cancellation rate was only 2% in 2022. 

In terms of overall outstanding bookings brought forward from 2022, Zainal said there are 220,000 units which Perodua will fulfil in 2023. 

Perodua aims to maximise its production to 330,000 units in 2023, up 14.2% from the 289,054 units produced in 2022. It also targets sales of 314,000 units this year, 11.3% higher than the 282,019 units sold last year.

Zainal said the normal installed annual production capacity of the company's plants is 320,000 units on a two-shift cycle. 

“We can still increase our volume by improving productivity, and by instituting overtime,” he said. 

He added that Perodua had earmarked RM10 billion to purchase parts from local suppliers to meet its 2023 targets. 

Zainal believes that the total industry volume (TIV) in 2023 can go beyond the 650,000 units forecast by the Malaysian Automotive Association, with potential to reach 705,000 units in 2023.

Notably, Malaysia achieved a record high TIV of 720,658 units in 2022. 

Zainal said Perodua estimates its market share to be 44.5% in 2023, higher than the 39.1% achieved in 2022.

On Perodua’s export market, he said the company predicts a gradual export growth to 3,300 units in 2023, 4,680 units in 2024, and 8,410 units in 2025. Perodua exported 1,137 units in 2022. 

Zainal said that Perodua’s cost and quality competitiveness is still not at the desired level in the export market. 

Among strategies that Perodua will undertake to revive its export market in 2023 include continuing cost-efficiency activities and strengthening its export organisational structure. 

In conjunction with the media outlook conference on Tuesday, Perodua announced that the latest Axia model, under the Perodua Smart Build, is now available for bookings across the country. 

“The tentative price range of the all-new Perodua Axia is between RM38,600 and RM49,500 [without insurance and in West Malaysia]. Full specifications will be shared during the launch [in mid-February],” Zainal said. 

Listed UMW Holdings Bhd has a 38% effective interest in Perodua, based on the group’s 2021 annual report. 

At the close on Tuesday, UMW was down 10 sen at RM3.70 a share, giving it a market capitalisation of RM4.32 billion.

Read also:
Perodua to maintain prices of existing models in 2023