Kelantan PAS’ fleet of tax-free Mercedes-Benz cars had a 50% discount, is it true?

Recently the Kelantan PAS state government drew criticism to themselves following a report confirming that the Kelantan state government had indeed purchased a fleet of Mercedes-Benz cars for its official use.

Photos of Menteri Besar Datuk Ahmad Yakob’s Mercedes-Benz S450L AMG Line bearing registration number DV 1 were circulated on social media platforms.

Apart from the S450L, the state government had also confirmed that it purchased another 13 more unspecified Mercedes-Benz models to replace the state’s aging fleet Mercedes-Benz models of more than 10 years.

The Kelantan Menteri Besar’s Office was quick to deny that the purchase was made using money from the Federal government’s RM400 million special allocation meant for the state’s welfare. Kelantan is one of the poorest state in Malaysia.

To be clear, there is nothing unusual (at least in Malaysia) about a state government using high-end limousines as its official car. The Penang state government also uses an older previous generation S-Class while the Sarawak state government (also one of Malaysia's poorest) uses an S400h.

What caught our attention was the following reply by Kelantan deputy Mentri Besar Datuk Mohd Amar to the press:

“The prices don’t matter because the state government gets a 50 per cent discount because they are not taxed.

“I don’t know the exact price but there are discounts.

“So, there is no issue with our use of the Mercedes Benz since it was used during the time of the late Datuk Nik Abdul Aziz Nik Mat,” he said.

Is it true that the cars were exempted from paying taxes? Yes, all government registered vehicles are exempted from taxes. 

The locally-assembled (in Pekan, Pahang) Mercedes-Benz S450L AMG Line retails in Malaysia for RM 699,888, after tax.

Without taxes, the S450L sells for RM 400,240. That’s a 43 percent difference. Close enough to be loosely considered as a 50 percent discount? Maybe, especially if there were additional fleet purchase discount.

In any case, media reports of the Kelantan state government spending RM 700,000 on the S-Class is not true.

Having an S-Class for official state use isn’t unusual. It might not be good for public relations, but nobody can say that it is not legal.

The problem however, is that these same PAS loyalists had earlier criticised the Federal government’s proposal to purchase 32 units of Toyota Vellfire to be morally wrong, as it's wasting tax payer’s money.

The proposal also included 3,000 units of Honda Accord and 8,000 units of Proton Persona and Proton Saga.

As mentioned earlier, government-registered cars are exempted from taxes.

Without tax, a Japan-made Toyota Vellfire sells for RM 200,221. A tax-free Honda Accord 2.4 VTi-L Advance, locally-assembled in Pegoh, costs RM 127,500.

After much public criticism, the government backtracked on the proposal, and switched back to the Proton Perdana, which you may be surprised, isn’t that much cheaper than a Honda Accord, even without tax.

A tax-free Proton Perdana 2.4L costs RM 126,137. How can a Proton Perdana, despite its lower specifications, costs nearly as much as a Honda Accord equipped with the latest Honda Sensing?

Explaining that requires a separate post, but the simple explanation is that the Honda Accord is a global car and with a bigger volume, its manufacturing cost is lower than a very low volume Proton Perdana.