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RAM Ratings affirms AAA(s) rating of Mercedes-Benz Services Malaysia
Published on 12 Jun 2026.
RAM Ratings has affirmed the AAA(s)/Stable rating of Mercedes-Benz Services Malaysia Sdn Bhd’s (MBSM or the Company) RM3 bil MTN Programme (2018/2038), reflecting the irrevocable and unconditional guarantees extended by its parent, Mercedes-Benz Group AG (the Group).
The rating continues to hinge on the guarantor’s credit strength, underpinned by its leading position in the global premium automotive segment, robust brand equity and still-solid financial metrics. However, the Group’s operating performance has weakened amid softer vehicle demand, reduced competitiveness in key markets – mainly China – and persistent pricing pressures. In FY Dec 2025, revenue dipped 9% to EUR132 bil while pre-tax profit fell to EUR6 bil (FY Dec 2023: EUR14 bil). Although we expect earnings to remain under pressure for fiscal 2026, the Group’s sizeable net cash of EUR10.0 bil (excluding financial services) and steady cash flow generation should provide a meaningful buffer against near-term headwinds.
In Malaysia, MBSM serves as the captive financier for Mercedes-Benz Malaysia vehicles, financing 46% of new Mercedes-Benz vehicles sold in 2025. Its standalone credit profile is underpinned by sound asset quality, which partly moderates its structurally high leverage, reliance on wholesale funding, and modest profitability. The Company’s strategic importance to the Group’s domestic franchise and its role in supporting vehicle sales also reinforces its credit profile.
MBSM’s gross impaired financing (GIF) ratio improved slightly to 0.7% as at end-2025, indicating that overall asset quality remains sound. Its credit cost ratio rose to 43 bps while GIF coverage moderated to 78%, mainly due to write-offs related to specific portfolio events during the year. All said, we expect asset quality to remain broadly stable, backed by a predominantly higher-income borrower base, although selected SME borrowers may face tighter repayment capacity in the challenging operating environment.
Financing receivables declined 7% last year, tracking the 24% contraction MBMy’s vehicle sales as competition intensified, particularly from Chinese EV marques, while consumer preferences shifted toward more technologically advanced models. The contraction underscores MBSM’s close correlation to the performance of the underlying vehicle franchise. We expect financing growth to recover modestly this year, supported by price adjustments, product refreshers and more competitive financing packages, although the pace of recovery will depend on MBMy’s ability to defend its market share in an increasingly competitive domestic auto market.
Higher impairment charges and margin compression pushed MBSM’s pre-tax profit down to RM21.8 mil in FY Dec 2025 (FY Dec 2024: RM23.9 mil), highlighting the Company’s still limited earnings buffer. Although gearing stayed elevated at 10.4 times, its borrowings are fully guaranteed by the Group, supporting continued market access and funding flexibility despite the Company’s dependence on wholesale funding.
Analytical contacts
Zahra Zarir
(603) 2708 8243
zahra@ram.com.my
Sophia Lee
(603) 2708 8211
sophia@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.
Published by RAM Rating Services Berhad
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