MAA anticipates a 70,000 spike in car sales with SST exemptions – sets 300k target for second half of 2020

Back in May, the Malaysian Automotive Association (MAA) announced that it was revising its total industry volume (TIV) forecast for 2020, lowering it from the 607,000 units it had initially projected in January to 400,000 units (360,000 passenger vehicles, 40,000 commercial).

The revision was made taking into account the anticipated impact that Covid-19 and resulting movement control order (MCO) would have on the local automotive industry going into the end of 2020. At that point, sales – and consumer sentiment – was severely impacted, and with the uncertainty then, it wasn’t a surprise to see the forecast being slashed.

The situation has changed quite a bit since the revised forecast was issued in May. While Covid-19 hasn’t been completely licked, the reopening of the economy has been progressing well enough. On the automotive front, the SST exemption on the sales of new CKD and CBU cars until December has given the association much reason to believe that 2020 won’t be as bad as the May forecast suggested.

MAA anticipates a 70,000 spike in car sales with SST exemptions – sets 300k target for second half of 2020

Buoyed by the uptick in June sales, and with the promise of the SST tax holiday continuing to have a significant effect until the end of the year, the association has now revised its 2020 TIV forecast once again, this time to 470,000 units (427,700 PV, 42,300 commercial).

Essentially, it believes that the relief measures announced under the Penjana economic stimulus plan is good enough for a 70k spike in vehicle sales during the second-half of the year. The revised MAA forecast mirrors the numbers suggested in April by research house MIDF Research, which projected that TIV for the year would be around 480,000 to 490,000 units with control restrictions going the long course.

Interestingly, the TIV into June stood at 174,675 units, so the revised forecast is targeting sales in the second half of the year to be in the region of 300,000 units, which is effectively the same pace as that in the corresponding period last year. Sounds ambitious, but it’s obvious that the association believes that it’s well achievable with the sales tax exemption in place.

Nonetheless, the revised TIV still represents a 22.2% contraction from the 604,287 units managed in 2019, and it looks very likely that this will be the first time in 13 years that the TIV has not breached the 500,000-unit mark.

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