Car buyers are currently enjoying a “tax holiday” with the goods and services tax (GST) rate currently set at 0%, which has resulted in prices being lower than before. However, many are wondering what will happen to car prices when the sales and services tax (SST) makes its return on September 1, and if they should make their purchase now.

According to Proton, now is the best time for consumers to purchase a new car, before the implementation of the SST. Citing Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad (and other sources), Proton believes car prices could go up with the return of the SST.

In May this year, finance minister Lim Guan Eng announced that the SST rate would be set at 10%, the same rate it was when it was replaced by the goods and services tax (GST) in April 2015. Later on, the MAA said it expected the government to set the SST to be lower than GST (6%) in order to lower vehicles prices further to promote buying. The MAA president also noted that the introduction of the GST a few years ago did have an impact at reducing car prices.

On the topic of the used car market, Proton stated that sellers generally absorbed the GST amount, and that prices won’t be affected by zero-rated GST. While consumers might view the used car market as more appealing, the processes of buying a used car could be more cumbersome due to the potential difficulty in getting loan approvals and high interest rates.

What do you think will happen to car prices following the implementation of the SST? Share your thoughts in the comments section below.