Government mulls Benz, BMWs as Proton delays new Perdana

KUALA LUMPUR, Sept 28 — Despite the moribund economy, the government is mulling the use of imported luxury cars for the Najib administration and top civil servants to replace its leased fleet of ageing Proton Perdana V6 Executive vehicles which are no longer in production.

The cars — Mercedes Benz S class, BMW 5 series, Toyota Camry and Honda Accord — are likely to be leased for four years from Spanco Sdn Bhd, which has a 25-year concession with the government ending 2018 that is now worth RM80 million a year.

The Mercedes Benz S class.

The Malaysian Insider has learnt that the judiciary has decided on using the Mercedes Benz and that perk could extend to ministers.

"The Mercedes Benz cars are already being assembled now in Pekan in anticipation of the lease," a government source told The Malaysian Insider, referring to the assembly plant in the prime minister's constituency.

The new cars could raise heckles as Barisan Nasional (BN) lawmakers had objected to Pakatan Rakyat (PR) administrations in both Perak and Selangor for opting to use Toyota Camrys over the Perdanas, accusing them of being unpatriotic and disloyal to the national carmaker.

The BN government that ousted PR in Perak later put the Camrys on the auction block early this year.

The BN government in Terengganu also raised eyebrows last year when it ordered 14 Mercedes Benz E200 Kompressors for RM3.43 million to replace the Perdanas, citing costly maintenance for the national car.

The BMW 5 series.

Proton is already looking at a new model next year to replace the flagship Perdana, which was launched in 1995 as the badge-engineered version of the seventh-generation Mitsubishi Eterna. The current Proton Perdana V6 Executive used by the government is 10 inches longer than the standard model.

Another government source said the new cars had competitive lease rates, reducing initial costs but he reckoned Spanco can turn in a tidy profit from maintenance charges.

"The lease for each car is four years and maintenance charges are a bit high but they do everything from A to Z. So on paper, it's worth it for the government," he told The Malaysian Insider.

The government stopped buying cars for the administration and senior government officers since January 1994 by agreeing to lease from Spanco which initially provided Mercedes Benz and Volvo models.

But the Tun Dr Mahathir Mohamad administration stopped that in 1997 under its austerity drive during the height of the Asian financial crisis.

Deputy Finance Minister Datuk Kong Cho Ha told Parliament last year that apart from cars for official government use, Spanco also leased saloon cars for the various ministries and federal departments.

"Under the agreement, Spanco is responsible for supply, maintaining and repairing all cars leased by the government.

"In return, the government pays for the cost of rental, maintenance and repairs to Spanco on a monthly basis based on the number and type of cars leased," he said in reply to Lim Kit Siang (DAP-Ipoh Timur) who wanted to know the cost and benefits of leasing Proton Perdana V6 as official cars of the government.

He said until July 2008, a total of 8,341 cars were leased of which 105 were for use by members of the government administration.

The Proton Perdana V6.

"The average yearly maintenance cost (not including repairs) for the Perdana V6 cars was RM2,373, which was 55 per cent less than RM3,693 for the standard yearly maintenance cost of a Mercedes," he said, adding that the government found using the Perdana V6 to be very practical as it seldom had serious technical problems. Apart from the Perdana as a standard car for government servants, Spanco also provides the Proton Waja.

Spanco was given the contract to lease and maintain vehicles for the government for 25 years as part of the government's privatisation exercise. It was seen a good deal as many government departments, such as the police force, had thousands of cars, and leasing and maintenance was not Spanco's core business.

In 2004, the Finance Ministry asked Coopers & Lybrand to review the Spanco deal in the belief that the government had paid too much. The contract sum was then reduced by 20 per cent from RM100 million a year to RM80 million a year.

The decision to renegotiate the Spanco contract came after the then Deputy Prime Minister Datuk Seri Najib Razak said that the government would look into lopsided concessions.

Najib, who succeeded Tun Abdullah Ahmad Badawi as prime minister last April, had added the government would learn from its mistakes to ensure that it did not get the short end of the stick when negotiating deals with the private sector.