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As previously report, the Malaysian Automotive Institute (MAI) has predicted that the prices for new cars could drop by about one to three percent once the Goods and Service Tax (GST) is implemented next year. A new report by Bernama has now indicated that the prices could be offset by costlier imported auto parts.

This is because the parts which are mostly imported from Japan could be affected by the potential appreciation of the yen against the ringgit, causing the savings of the slightly lower prices of new cars to be countered against as components would cost more.

In response to the potential drop in new car prices, Royal Malaysian Customs Department GST Director, Datuk Subromaniam Tholasy, has been quoted by Bernama as such, “So, I will never say that car prices will go down. I don’t know, nobody knows.”

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According to him, the foreign exchange rates poses as the main factor. “There is some savings but we must always remember, the biggest cost for cars are not the tax components, i.e., GST, it is the foreign exchange rate”. As for the case with used cars, Subromaniam predicts that values will dip further.

“When new car prices come down, what happens to the old car? It will go down even further next year. If you want to change (old car), you change this year. If you are going to change next year, probably it will be worse off, unless you are making a first purchase of a new car,” he told Bernama.

MAI has reported that the total industry volume (TIV) has seen a rise this year as compared to the same period a year ago. From January to July this year, a three percent rating was chartered for the TIV as opposed to last year’s period. The forecast for TIV was revised to reflect a change from 670,000 units to 680,000 units.

The CEO of MAI, Mohamad Madani Sahari is also adamant that the values of used vehicles will continue to dip, by an average of five to ten percent per year once GST is implemented.