Locally assembled vehicles may cost more following the possible restructuring of automobile duty rates by the government, The Star reported. “With the excise duty gazette released on Dec 31, completely-knocked-down (CKD) vehicles will most likely be liable to pay more taxes. We are still analysing the impact,” a source familiar with the matter was quoted by the news daily as saying.
News of the duty restructuring first emerged earlier this month, where finance minister Lim Guan Eng said that finance ministry and the ministry of international trade and industry (MITI) are involved in discussions. The matter is being studied by a joint committee comprised of officials from both ministries and chaired by the two ministers in charge, The Malaysian Insight reported last week.
The mechanics of the restructuring of duties and taxes were not revealed, and MITI said last year that it was considering a reduction in excise duty for vehicles as a possible way for bringing car prices down. While any reduction in excise duty would mean less direct revenue, it would be offset by total collection due to increase vehicle sales, deputy minister of international trade and industry Ong Kian Ming said at the time.
It remains unclear for the time being how the review will affect overall duties for cars at this point, though higher car prices will be politically unpopular, RHB Research said in a report, pointing out that a potential rise in car prices could lead to lower vehicle sales given the current soft consumer sentiment.
“In the Pakatan Harapan election manifesto, it promised to reduce the excise duty on imported cars below 1,600cc engines for first-car buyers with household income below RM8,000 a month. However, lower car prices will not mean higher car sales immediately and could bring about other unintended consequences,” the research arm said.
With a large proportion of vehicle sales in Malaysia comprised of locally assembled vehicles, the potential tax hike could make fully imported (completely built-up, or CBU) cars more attractive, however approved permits for these models cannot exceed 10% of CKD total industry volume (TIV), an industry observer said.
The current vehicle duty structure dictates that in addition to the 10% sales and service tax, all vehicles sold are laden with excise and import duty. Excise duty is between 60% and 105%, calculated based on the car and its engine capacity, while import duty can reach up to 30%, depending on the vehicle’s country of manufacture. That said, vehicles built in Japan and ASEAN countries are not imposed with import duty.
The industry observer opined that the tax structure has come under review because local CKD manufacturers ‘have been known’ to under-declare the foreign content levels of the vehicles produced and ‘escape with huge profits’ as a result. Another industry observer noted that raising car prices will benefit local makes due to their lower price points, though it will also deter foreign direct investments into the industry, the source added.
While lowering car prices could lead to longer-term positive outcomes, this could also eventually lead to a negative impact on the industry, the research firm added.
The objective to lower car prices is achievable in the medium term. The overnight implementation of lower new car prices could result in a significant upheaval for car residual values, until the market is able to fully digest the changes,” the firm said, adding that a change in the duty structure from revisions in the 2006 National Automotive Policy (NAP) resulted in a collapse in new car sales and it took more than 12 months for the market to recover to pre-NAP TIV sales levels.
RHB Research expects consumers to postpone vehicle purchases as the possible price changes take effect, and new car sales will suffer in the short run as a result. “The resulting correction in used car residuals, due to lower new car prices, would also affect new car sales due to the erosion of the equity value embedded in used car residuals, which car buyers typically usually use as a down payment when buying new cars.”
“The banking sector could see an uptick in impairments, if there is a significant correction in used car residuals as collateral value falls short of the outstanding loan value,” the research firm said, also adding that ultimately the potential restructuring of duty rates on automobiles is a significant regulatory risk.
Malaysian vehicle sales for November year-to-date saw 549,445 cars sold, which was marginally down from the 550,526 vehicles sold in the same period for 2018. The Malaysian Automotive Association (MAA) will be announcing TIV figures for 2019 later this month. As of July, the association maintained its full-year forecast of 600,000 sales, in light economic uncertainties.
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we pay USD30k for China car?
American pay USD35k for Tesla3 bro
Actually this is very good thing to see that, Malaysians will now turn away from buying Honda Cars. But sooner, when launching new Honda City and Jazz without AEB, land departure warning, rear cross traffic alert and others. Malaysians will buy other brands instead of Honda. Even Malaysians also complaint about service and car quality
Cars so cheap here in Malaysia, like i alwiz said. Perodua Bezza selling in Sri lanka and Mauritius 3rd world country… RM86K beb. Fuuh
Bezza katsini 35k aje. minyak, tol pon murahh
Besides, You compare to Japan vs Malaysia and see? which quality is more higher? Obviously Honda Japan has higher quality and greater service! But in Malaysia, they sell very very cheap cars with bad quality and poor aftersales service
epic this comment..lolzz
here gov and car distributors are too greedy…
because US priority human right, you increase car price they will protest and huha-huha like no tomorrow..
Good. Make sure the maximum amount car loan or hire purchase is set at no more than USD15k, loan period max 48 months.
U turn, wrong turn
Already we have the highest car prices in the world due to 60 years of inefficiency, now, we have to pay more? This is madness.
This is why I say, PH or BN, both sama sama. Both also have majority who are lazy and want everything easy by passing the buck to the rakyat.
Car prices are going higher because our local car companies hire to many people
For example. Proton has 12,000 workers. But they only produce 60,000 cars per annum
Mitsubishi in Thailand has 6000 workers. They make 350,000 cars per annum
In summary, 12,000 workers make 60,000 cars in Malaysia whilst 6000 workers make 350,000 cars in Thailand
This is why cost is going higher and higher. Here, local car companies are told to take overbloated staff even though they are not qualified.
This is locally assembled vehicles meaning the Hondas, and Toyotas and Peroduas. Nothing to do with Proton as Proton is locally made.
if the proton in locally made then why perodua treated as locally assembled? bcoz perodua take parts from daihatsu? so do proton take accord dashboard, engine & gearbox for perdana and hyundai gearbox for saga..both best selling model from p1 and p2 got parts sharing..so just treat both the same right?
Bcoz P2 takes entire car from Daihatsu & Toyota then reskinning them, so it is not locally made. Not like P1 still got 99% part of Saga is locally develop & made.
Copy paste: “Interesting how PH troopers kept complaining about BN making car prices high but here PH is raising car prices even higher. Lol!”
Another classic case of misinformation by our favorite RBA. As Goebbels said: “a lie told once remains a lie, but a lie told a thousand times becomes the truth”
https://www.google.com/amp/s/www.nst.com.my/node/212733/amp
Ceupacs disagrees vehemently with that spin of yours.
Copy pasting your comment for reuse. if you dont mind….
Sekarang PH sudah kelentong kami. Sama macam BN tipu kami. BN pun janji nak reduce car prices by 30%…..
Mana janji itu? Saya tunggu 5 tahun, harga kereta semakin naik dari 2012 hingga 2018
Rakyat akhirnya kena tipu
Kan dah kata Manifesto sebenar kita; Penipuan diutamakan, janji dicapati. he he he he…
yeah can reduce only few bucks..but increase the taxes..still no use..yet so many people vote for them hoping for moon and star..bun only got shit everyday
Please ask Rafizi. He know how to reduce Msian car price
super-know everything until quit politics
U turn again later
This piece of new is just to justify excise duty of foreign make.
Government needs the money to feed the 1.6 million Government servants in Putrajaya. Reduce them, then, you will see, cost of Government also reduces. So, they won’t tax CKD so much
Malaysia population is 35 million people. Got 1.6 million Government Servants
Australia population is 35 million people also. Got only 250,000 Government Servants also
Malaysia got 1.6 million gov servants. No raging bush fires.
Aussie got 250k gov servants. Out of control raging bush fires.
Iceland has 25k gov servants and ice and snow. Malaysia has 250k gov servants and no ice, no snow.
Ice and snow kills. Yeah, not everything is nice that you see in a Frozen movie.
Another classic case of misinformation by our favorite RBA. As Goebbels said: “a lie told once remains a lie, but a lie told a thousand times becomes the truth”
https://www.google.com/amp/s/www.nst.com.my/node/212733/amp
Ceupacs disagrees vehemently with that spin of yours.
Habislah to Honda, it is good to see. Sales will drop. Quality and aftersales service is damn poor
Finish Honda Malaysia, even this facelift revealed, especially for upcoming City Turbo also no AEB, no land departure warning and no blind spot monitor. Salesman will start crying. So called as “Power of Nightmare Cars”
As majority in Malaysia fed up of driving honda cars because too many quality issues on newer Honda models after bought for less than 1 year. When go to aftersales service, people also complaining most of the aftersales service dealer. Cannot solve. Shows that technicians are having half past six, lying, didn’t repair at all, never repair other peoples car at all.
Yet, some of them are still buying Honda cars with brainless. Also, come here hating kimchi cars with low resale value and hating mazda. Just look at safety specs, most of Honda models are really kosong spec. Compare to Mazda, Toyota and Hyundai Ioniq comes with blind spot monitor, AEB, land departure warning and others. No wonder, many mazda CX-5 and Proton X70 everywhere than looking Honda CRV is now rare.
Malaysians rather buy mazda. This comes with 5 years warranty as Honda. Bermaz service is better and they already improved their service than honda. Even CKD Mazda CX-5 looks so so but better than most Honda models. So Honda Malaysia is dead.
When talking about Japanese car reliability, it is only Toyota/Lexus, not others… Other brands are just riding on “Japanese Reliability” reputation because of Toyota had built that reputation..
Toyota reliability is not the same with Honda, Nissan, Mazda, Subaru..
2019- X70 cbu will be pretty expensive because it’s cbu.
2020-uhh this is awkward. Now the X70 ckd will be pretty expensive because it’s ckd.
Malaysians always cheated by DRB Honda. In Japan, Honda HRV got Honda Sensing consists of AEB, Blind Spot Monitor, Land Departure Warning, Rear Cross Traffic Alert and etc plus with good car quality and good aftersales service too!
But for DRB Honda, they sells RM108K to RM123K for Honda HRV without Honda Sensing consists of AEB, Blind Spot Monitor, Land Departure Warning, Rear Cross Traffic Alert that you have missed ! Even Honda DRB assembles Honda Models in Melaka with super low quality!
Somemore, still talking about Honda DRB, Malaysians who owned Honda cars, go to service centers and see. After few weeks later or several days later of taking their Honda cars out from service centers, people felt that still having same big problems and always have to spend spend spend for buying parts without problems solved just like buying new smaller A segment car.
Now you know, This is how stupid Malaysians are. And How DRB Honda can protect the people safety lives when DRB Honda Safety is becoming more riskier to the customers.
Don’t worry once Mazda 3, Corolla Hybrid and Ioniq Hybrid Facelift becomes cheaper here, Civic 1.8 sales will drop for sure.
Let’s do it the easiest way using the most logical common sense thinking.
First. Cars depreciate. This we accept. But the tax and duties should be a one time payment which should not be a part of the car value that depreciate with time and usage.
1. Reduce excise duty for all cars to only 40% max. Or maybe lower.
It starts with 2021 with 10%.
And 5% for the following years respectively.
2. Fully.imported car should be taxed as the current procedures since vehicle assemblies bring along job opportunities, part supplies and construction contracts.
This except for AFTA agreement.
3. Then there is is this luxury tax, which is a straight forward meaning. All BMWs and Mercs are luxury cars. this is where govt will recover the lost excise duties. Up to the G to decide what cars falls under this category and the amount taxable.
4. The last is a special tax which should only apply to highly congested cities like klang valley, JB and Penang. Maybe a 1 time 20k on top of the car total.price.
With this, car owners will get a special plate which allows them.to be driven in the urban at privileged times. This is when govt can start controlling the number of cars in the city roads to curb excessive congestion.
Loose all cars above 35 years (send to remote towns or estates), make all cars more than 25 years to go for yearly MoT inspection (to ensure no breakdowns causing jams) and pay higher taxes.
The end target is our cities will have less cars, public transport gets more efficient including busses taxis and ehailing cars, the air is better to breath and lower pollution in terms of smog in the air.
Exemption from.this tax are hybrids and EVs that produce less than 100g/km of CO2. And also the congestion charges.
All other cars will have to pay.
give this man a cookie!
Betuii … Less cars, more public transports.
Manifesto is not a janji. Everyone should know this. Better spend the money to kereta terbang, reduce traffic.
Times up Honda…..
Next gen Accord will be more pricier
Odyssey will be more pricier
Civic 1.8 will be more pricier
CRV 2.0 will be more pricier
Civic Type R will be more pricier
Sales will drop
New City – due to low safety
New Jazz – due to low safety
BRV – due to poor low safety
Civic 1.5 TC – due to low safety
CRV 1.5 TC – due to low safety
Interesting how PH troopers kept complaining about BN making car prices high but here PH is raising car prices even higher. Lol!
Good luck to PH government. Vehicle prices in Malaysia is a very sensitive political subject. The moment the rakyat hear of a price hike, confirm next election the ruling government will fall. TIV volume of CKD units is a lot more than CBU so why are the clowns in the goverment reducing tax for CBU units?
We need to reduce CBU taxes in order to justify the ‘cost savings’ when buying the thousands of Velfires and Thailand Accords for our ministers. Need to keep them happy you know. he he he he…..
Patriotik ministers picked Perdana instead. Lol
Locally assembled vehicles may cost more – In the Pakatan Harapan election manifesto, it promised to reduce the excise duty-…
Manifesto dicapati, Uturn di utamakan. Congrats PH!
subsidy kasi sikit, tempat lain kasi ketuk kaw kaw.
Buy a solid car take 5-6 year loan and keep for 10 years. Make sure new and used part are plenty and reasonable. You cant go wrong. Btw solid car does not include Honda. Honda quality is bad….
if the proton in locally made then why perodua treated as locally assembled? bcoz perodua take parts from daihatsu? so do proton take accord dashboard, engine & gearbox for perdana and hyundai gearbox for saga..both best selling model from p1 and p2 got parts sharing..so just treat both the same right?
Buy a solid car take 5-6 year loan and keep for 10 years. Make sure new and used part are plenty and reasonable. Also plenty of outside workshop can repair and maintain the car. You cant go wrong. Btw solid car does not include Honda. Honda quality is bad….
Want to buy cheap car?
Just wait for year-end sale, merdeka sales, stock clearance sale, pre-reg sale, tekan the sales man etc (someone bought a BMW 318i for RM 170k)
Buy good, safe, low FC and reliable car, take good care of it and last for 10 years.. I only change cars when it hit 8 to 10 years, my VW is almost 8 year now.. Anyway, gonna switch to Japanese for my next one..
There are million ways on how we can save… I had given up hope that G-men reducing car price..
Anyway, we are no longer the most expensive car in this region… Singapore has always been leading, and now Thailand cars are more expensive than us, we are neck to neck with Philippines car price..
Everyone don’t buy new are for 1 year. Wait till market adjust. Just vote with your pocket.
Just don’t vote for PH. Simple!
Ini kali kasi bungkus itu PH…goodbye PH,! Enough is ENOUGH!
This will be one of many nails to PH’s coffin.
Under them, everything Pasti High.
Sigh…
I think need to ubah back.
YOU SPEAK THE TRUTH!!!!
Sure only the bank and insurance company support this move. Will be extended the loan term from current is 9 years to max 13 years.
Rakyat will work hard for the bank on payment.
MIDA need to learn a new business strategy on financial model analysis. Surprise me they are still using 1950s financial model market analysis in 2020? Where the 6sigma, Lean Management will be replaced by AI, Big data and IoT, etc.
So, what is the rakyat option?
Wow…. so much for the manifesto. Can we trust any side of the political divide now?
Easy. Old team didn’t promise all the fantastic promises but delivered many goodies quietly.
New team went to town and kampungs huuhaa their fantastic promises like they fulfil them all, but now manifesto is broken like glass.
So it is easy which side to pick next and forever.
revise here revise there…in the end the price will only go up. so far the only realistic thing that we get is cheaper broadband plans…the rest, talk ayam jantan.
The Accountant Clown has no idea of economy..instead of try to grow the economy, we have all policies to kill the growing and HOPE foreign companies come to invest to rescue…jokers to the max.
Our unqualified accountant did came out with a subsidy plan that will increase cost of living. And he is the best one we got. Go figure.
Genuinely stupid. I can’t believe they’re making such move.
Syabas Abg Ong! I like the new policies by PH. It seems there’s systematic actions taken by the govt to ensure they won’t be reelected come the next election. Perhaps there’s too much sh*t to bother and/or the reward is not worth the cause. Better off to be out of office.
Just perplexing.
What is land departure? Please elaborate?
land departure is for making the car flyoff, as in kereta terbang.. lane departure on the otherhand, for land-dwelling vehicles only..
A wise society won’t be measuring itself by total number of vehicles sold.