Taxation of Mercedes Benz and the automobile industry

Tax system would be one major political factor that affects imported auto industry. The import responsibility for autos will be charged from 140 % to 300 % based on the engine ” s class and revenue enhancement is calculated based on auto ” s cost, insurance and cargo [ Royal Malaysian Customs & A ; Excise Dept, 2000 ] . This is a menace for the imported auto industry, because the monetary values of imported auto will be more expensive than local manufactured auto. Besides that, authorities policies would be another cardinal factor, foreign houses can fabricate luxury autos locally on 31 December 2015, AP no longer needed [ New Sabah Times, 2009 ] . The chance occurs when foreign house can cut down their fabrication cost and clip. Previously, foreign house demand to import auto ” s parts from abroad by 18 months ” clip. Meanwhile, authorities subsidies can impact the merchandising in auto industry. Since Malaya is ranked no.23 in the universe as a petroleum oil exporting state the authorities subsidizes a batch on petroleum oil by the gross from PETRONAS and it makes Malaysia ranked no.16 as the cheapest rough oil monetary value in the universe. As we know, rough oil and car are complement, so it makes Malayan is non a large load to have a auto. This is an chance for car makers to sell their merchandise in the market because the outgo to have a auto in Malaysia is non high.

Economic factors would be straight impacting the merchandising of the merchandise. Exchange rate between Euro and Ringgit Malaysia may impact the monetary value of imported autos. It makes the European auto more expensive when selling in Malaysia due to the currencies exchange rate as RM4.36 per ‘1 [ Friday, 2010 ] . This is a menace for car houses that import autos from European market, because the monetary value of imported auto will be higher than local manufactured auto. Economic lag in Malaysia would be a factor that decreases the purchasing power of consumer due to the decreasing of income and likely unemployment. In 2009, Malaysia has a GDP growing rate of -1.7 % , the lowest growing rate for more than a decennary [ World Bank national histories informations, 2009 ] . Car makers are happening it increasing hard to sell autos with the low GDP growing, the menace occurred. Besides that, rising prices will impact the disbursement wont of people. It makes people have less money to pass because the monetary values of goods are traveling up, causes great impact for the gross revenues of auto makers. The rising prices rate of 0.6 % has decreased 4.8 % compared to old twelvemonth. But, the increasing monetary value of natural stuffs and the cut downing purchasing power of consumers will diminish the net income of auto makers as a menace [ IndexMundi, 2008 ] . Company needs capital to put by holding loan from bank in order to spread out or looking for bigger net income. Harmonizing to the information that has gathered, Malaysia involvement rate had increase 0.25 % from 2.5 % to 2.75 % on 8 July 2010 [ World Interest tabular array, 2010 ] . The higher involvement rates may do houses discourage investing because it costs more to borrow. It would be another economical menace.

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In societal, income can reflect different societal classs. Peoples from high income class normally buy luxury auto as the mark of prestigiousness. This would be an chance for luxury auto ” s makers to sell their merchandise to the high income class. Besides that, there is a auto having tendency in Malaysia. Almost everyone who got a drive licence would have a auto if their household is low-cost, because the outgo to keep a auto in Malaysia is low comparison to most of the state in the universe. In fact, Malaysia ranked no.3 in the universe as one of the highest motor vehicles having rate in the universe with 641 motor vehicles per 1000 people due to the statistic research from United Nation [ CIA World Factbooks, 2008 ] . This is chance for auto makers to sell their merchandise in such a high demand state. The criterion of life of Malaysia is considered in higher place in the universe. It can act upon the purchasing wonts of the people of the state. Therefore, people will prefer to purchase a safety auto with tonss of advanced safety characteristic in order to minimise the impact from auto accident. As we know, European autos are celebrated in safety engineering. It is chance for European auto ” s makers to fulfill the consumer demands. Population growing rate of Malaysia has decrease comparison to old twelvemonth. It decreases from 2.01 % to 1.72 % from the twelvemonth 2000 to 2009 [ United Nations Population Division, 2009 ] . It would be a menace as it affects the auto demand in the state due to the diminishing growing rate of population.

Technology of foreign auto makers ever influence by its female parent state. Luxury vehicle division such as Mercedes Benz, BMW, and Audi are based in Germany. Germany is regarded as the most environmental pattern state in the universe. It encourages the state to integrate research and development toward eco-technology. The available of Hybrid engineering in Germany make the German makers in turn launch the intercrossed autos because the universe demands are increasing particularly the demand in US market had increased aggressively by 9.2 % comparison to old twelvemonth [ May 2010 Dashboard: Hybrid Car Gross saless Rebound, 2010 ] . Meanwhile, scientists in Germany had unveiled the latest self-driven auto on October, 2010. This driverless engineering can cut down accidents and assist the environment. It is a great invention in auto industry. This German engineering gives a batch of benefits to the German makers. The handiness of driverless auto engineering for German auto makers can pull new clients market and besides surpass other rivals which non available for this arresting engineering, because this invention offers a better quality merchandise [ Staff Writers Berlin ( AFP ) , 2010 ] . Besides that, the available engineering of ICT with increasing figure of internet users makes auto makers easy to publicize their advertizement and let go of any latest intelligence and information on cyberspace. There are 1.9 billion of cyberspace users today, increased by enormously 444.8 % comparison to past 10 old ages [ Internet use statistic, 2010 ] . This engineering can profit either clients or makers due to information gather rate is higher than old. Basically, all the technological factors are chances to houses.

Porter ” s 5 forces describe the menace of new entrants, dickering power of provider, dickering power of purchaser, menace of replacement and competitory competition.

First, the menace of new entrants for Mercedes-Benz in this industry is at low hazard because it is luxury goods and difficult to put up and mount to such a high prestigiousness degree. Furthermore, the cost to put up in this section is high because Mercedes-Benz is a luxury auto and entrants towards this section require a big sum of capital [ David Highfill, 2004 ] . Harmonizing to client keeping survey, Mercedes-Benz has climbed its client keeping ranking from No.4 in 2008 to No.1 in 2009. It shows that client trueness to Mercedes-Benz is increasing. It ” s really tough for new entrants in auto industry to vie with Mercedes-Benz. Therefore, the menace of new entrants for this car manufacturer giant is really low.

Dickering power of provider is low in this industry because there are tonss of replacements for providers while car manufacturers are limited as a client of provider. Most of the providers rely on one or two car manufacturers to purchase bulk of their merchandises. If Mercedes-Benz decided to exchange providers, it could be lay waste toing to the old provider ” s concern. Besides that, Mercedes-Benz has a higher profitableness than the provider. As a consequence, providers are highly sensitive to the demands and demands of the Mercedes-Benz and keep really small power to deal.

The chief factor of dickering power of purchaser is based on figure of purchasers and figure of marketer. In car industry, the purchasers are ever more than the marketer. There are few luxury auto houses in Malaysia such as Mercedes-Benz, BMW, Audi, Volvo and Lexus, but the purchasers of luxury auto are estimated around 9780 in 2009. Another factor of dickering power of purchaser is the volume of purchaser consume. As we know, normal purchaser would non devour big measure of Mercedes-Benz ” s auto. Basically, Mercedes-Benz manages to restrict the bargaining power of purchaser. However, luxury auto is non highly of import to normal purchaser, but luxury good searcher. Therefore, merely the purchaser of luxury auto holds really small power to deal.

Menaces of replacement for Mercedes-Benz are assorted. Rivals ” merchandise would be utility for Mercedes-Benz merchandise. There more than 30 auto trade names that selling in Malaysia might be a menace as replacement for Mercedes-Benz ” s merchandise. Harmonizing to the client keeping survey, Mercedes-Benz has crowned to be No.1 in client trueness. The menace of replacement for Mercedes-Benz in auto industry seems really low. Besides that, alternate transit would be another replacement menace. There is a batch of alternate transit to replace Mercedes-Benz such as coach, cab, train and aeroplane. Alternate transit is a factor which needs to be considered extremely to tag up the merchandising of Mercedes-Benz. The monetary value of gasolene has a big consequence on consumers ” determination to purchase vehicle. Peoples will look for alternate transit when the monetary value of gasolene additions. Despite that, the menace of replacement is low due to the inconvenient public conveyance in Malaysia and Mercedes-Benz chiefly targeted high income societal class as their chief clients. In fact, the increasing in monetary value of gasolene would non impact epicurean goods searcher ” s purchasing determination.

Highly competitory industries by and large earn low returns because the cost of competition is high. The car industry is considered to be an oligopoly, which helps to minimise the effects of price-based competition. There are merely few rivals in the luxury auto market section. These chief rivals of Mercedes-Benz are Audi, BMW and Lexus. In fact, Mercedes-Benz has dominated 49 % of the auto market portion in Malaysia. In 2009, Mercedes-Benz sold 3903 rider autos, which is No.1 in entire rider auto gross revenues in Malaysia within the luxury auto market section. Historically auto makers are tried to avoid price-based competition. In this mature industry with really small growing, companies can merely turn by stealing clients off from rivals. Companies normally lure clients by giving discounts, preferred funding and long-run guarantees. However, the distinction between rivals ” merchandise and services are little. Similar merchandise might increase the strength of competition because they are offering same merchandise value. Therefore, they will vie in footings of disbursement of advertisement, ethic and engineering invention. As a decision, the domination of Mercedes-Benz in auto gross revenues shows that the strength of competitory competition is low for the maker.


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