In a few days time, I will have the pleasure of driving the Nissan Fairlady 350 Z sports car. I bought it on hire-purchase from one of the many motor traders in the Klang Valley. The car is a 2005 model based on Japanese specifications. I had been looking for a black or dark-colored car but none was available that was to my taste. The silver-colored ones were plentiful but they didn't seem to attract me. Finally I chose an orange-colored car that was fitted with Brembo brakes, 19-inch wheels with 245/35 Bridgestone Potenza tyres with a lot tread left still. The monitor that came with the rear camera was not that important as the Brembo brakes. The odometer showed that the previous owner had driven the car for a distance of 16,110 km which seemed believable.
I hope the car I chose doesn't turn up to be a lemon that will rue me forever and I would swear never to buy a used car anymore no matter how good it looks. If indeed it were so, then I would immediately sell the car for a brand new Fairlady 370Z that sells for about RM 350-400K from Tan Chong Motors.
But before I made the decision to acquire the car from the particular dealer, I had been visiting a number of car traders in the Klang Valley. Some dealers offer cars that had suspiciouly low mileage like some 4,000 km despite being of 2005 make. While others, with what looked like proper mileage clocked on the odometer, had chassis numbers that were 1 or 2 years in mismatch with their year of manufacture. Some traders, with a take-it-or-leave it attitude, tend to stick to their quoted prices as if their cars were hot items in the car market. The salesmen would look indignant if we asked for a RM 5,000 reduction from the tagged price. To such people, I quickly said goodbye and promised never to step into their showroom again.
I had in the meantime scoured the internet in search for any relationship between car chassis numbers and year of manufacture. I found out that, among other things, the 10th digit of the chassis number (containing 17 alphanumeric characters in all) for car made in or sold to US or Europe represented the year of manufacture. However, Japanese cars made to Japanese specifications were different. Thus, a Nissan Fairlady 350Z with chassis number like Z33-402123 was of early 2005 make. I saw 3 cars with numbers of 200 .. something that passed for year 2005 makes and another 2 with numbers such as Z33-400564 and Z33-403555. Finally, I settled for one with a chassis number of Z33-403832 that had about 16,100 km on the odometer. Its an early 2005 production that had a lot of tread on the tyres.
While waiting for the loan to be approved, I checked on the Malaysian customs dept.'s tax structure on imported cars with capacities of 3,000 cc or higher. Before the 2006 Malaysian budget, the duty on such cars were horrendously huge. The tax on the car is 300 % on its CIF price and a further 10 % over the combined amount regardless of whether the car was an imported new car or used.
Thus a car sold for, say, USD 24,000 FOB in Japan would cost USD 26,000 CIF (Cost of Insurance and Freight in Port Klang). The customs dept. would straightaway impose 300 % import duty i.e. 3.6x26,000x(300/100) or RM 280,800/=. On top of this, the customs dept. would impose another 10 % in sales tax, not on the CIF price but on the combined CIF price and import duty. The sales tax would then be RM 28,080/=.
The importer would then have to pay a total of RM 3.6x26,000+280,080+28,080 or RM 401,760. But then there was an element of approved import permit (popularly known as AP). The importer would then have to add a further RM 30,000 to an AP holder making up the price to RM 431,760 and, since he had to make a profit of say 20 % for all his troubles, he added a further RM 86,352/= to push the price to RM 518,112/= as the price he's prepared to sell in Malaysia.
But back in 2006, would anybody then buy a used 4-year old car for half a million odd ringgit unless the car was a Ferrari or a Lamborghini ?
Some years ago, to wit 11th Oct 2001, the local media, NST, reported that the Customs & Excise Dept. of Malaysia, seized 112 luxury cars such as Mercedes, Jaguars, Rovers, Volvos, and BMWs for reasons of RM 8 million in unpaid duty. The owners had no documents to prove that duties had been paid nor proofs that they had import permits. The owners/drivers were, of course, unaware that the scams were perpetrated by even some of the bigtime motor traders in the Klang Valley. In all innocence, when the owners bought their cars, they assumed that all permits have been obtained and that all relevant duties have been paid. Another NST report on 24/10/2005 stated that Customs had seized 5 luxury cars from a Kajang workshop. The cars were A Mercedez Benz E-240, a BMW Z3, a Nissan Silvia, and 2 Nissan Skylines on which an estimated duty of RM 500,000/=. was not paid.
In the years of globalisation, what with AFTA and WTO, Malaysia had no choice but to reform its tax structure on imports including imports of completely built up or CBU vehicles. Nor can Malaysia impose tariffs with impunity without its own exports being subjected to import tariffs by its trading partners. Willy nilly Malaysia had to reform somewhat and came up with a much reduced import duty for imported cars(ranging from 5% to 30%). Not to lose anymore revenue, the wily Malaysian goverment introduced an Excise Duty when before there was none and was only applied to vehicles assembled in the country. Thus for a 3,000 cc or more car, the import duty is 30 percent on CIF of cars imported from non-ASEAN countries. It is 5 % if the car is imported from an ASEAN country such as Thailand or Indonesia. The excise duty is 125 % on CIF regardless of the sources of imports. The sales tax remains at 10 % on the combined amount of CIF and duties.
Thus for the USD 24,000 car from Japan, the importer/trader has to pay USD 26,000 (or RM78,000) in CIF to port Klang, RM 23,400 in import duty, RM 97,500 in excise duty, and RM 12,090 in sales tax. The landed price is therefore RM 78,000+23,400+97,500+12,090 or RM 210,990/=. Adding the AP cost of RM 30,000 and the trader's mark-up of 20 % i.e. RM 48,198/=, the selling price is then RM 289,188/=. There's no way that the trader can make a killing if he sells the car for RM 290,000/= . He would really make good money only if the trader is himself an AP holder (his AP cost is only RM 250/=), and the payout in duties are based on a different tax structure.
To add confusion to the already confused situation in how the customs dept. applies tax on imported cars, here is an example based on someone who imported two used Mercedez cars from Europe.
It starts from the price shown on the Docket. Is the price on the Docket the price of the car when new, or the price shown on the seller's invoice, or the price based on the Custom's own price list of the relevant car. Regardless, let us assume that that is the price to start with - which in this case is USD 35,000 [I am using this price of a new car rather than than the USD 24,000, which is for a used car, in the above example]. Inclusive of freight and insurance, the CIF price is then USD 37,000 or RM 133,200 (at RM 3.60 to 1 USD). The importer/trader enjoys a 15 % discount. The car's value is therefore 0.85x 133,200 or RM 113,220. Since the car is 4 years old, the car's value has dropped by a further 40 % (based on 10 % depreciation per year). Its value has now become 0.60x113,220 or RM 67,932. Then, there is such a thing as individual's discount of 20 %. The car's value is further reduced to 0.80x67,932 or RM 54,345.60. If the importer/trader had appealed to Customs HQ for a further discount for reasons of being a big importer or for having good connections, he stands to get a further 10 % discount. The car's value is finally reduced to 0.90x54,345.60 or RM 48,911.04. This amount is then called the Custom's Valuation on which duties are applied.
Thus the import duty is 30 % of 48,911.04 or RM 14,673.31. The excise duty is 125 % of 48,911.04 or RM 61,138.80. The sales tax is 10 % on the custom's valuation and the duties i.e. 0.10x(48,911.04+14,673.31+61,138.80) or 0.10x124,723.15 or RM 12,472.32. The total tax payable to the Customs dept. is therefore 14,673.31+61,138.80+12,472.32 or RM 88,284.43.
Since the importer/trader imports a used car for the price of USD 24,000, his cost to import the car is the CIF+the duties i.e. 3.6x(24,000+2,000) + 88,284.43 or RM 166,284.43 before the cost of an AP, interest cost, sales mark-up. There's no way that the importer/trader can make good money if he sells the car below RM 175,000 and yet somehow he is doing it !
Then I asked the importer/trader's salesman how the importer could get away with paying less tax than he should. The salesman explained that for say the above RM 132,200 car, the importer declared that he had bought it for half the actual price or even a third. Which means that the tax he would eventually pay was about RM 44,000 or may even be RM 30,000. Only then would he able to make a profit. I managed to inspect the document of an actual car being imported and was surprised to see that the tax was too low. No wonder this country is losing revenue.
While waiting for the documentation to be approved, I looked up the Nissan 370Z with the 332 bhp engine. It was introduced in 2008. Except for the cosmetics and the extra 200cc that gives it 52 bhp extra, there's not much difference from the old 350Z. Surprisingly, its latest on-the-road price is RM 370,000/=. However, if you bought this in Labuan or Langkawi, it would cost you RM 190,000/=. On another note, I chance to check on a top-0f-the-line Nissan sportscar which is the Nissan GTR38. Delivering an awesome 480 bhp it can easily outperform many of the top expensive European sportscars. On YouTube, I saw one being pushed to 192 mph and what's more its 0-60 mph was an amazing 3.3 seconds ! The Ferrari 430 of identical bhp cannot even match this !
