Prices for CKD (locally assembled) cars will increase by between 8-20% if new excise duty regulations are put in place, due to a change in methodology of how the open market value (OMV) of a vehicle is calculated, Malaysian Automotive Association president Datuk Aishah Ahmad said at the association’s annual general meeting press conference today.

As it stands, the exemption from the new excise duty regulations stands until the end of this year. “We have written to the government to appeal because they have given us the exemption until the end of 2022. We have appealed to say ‘please let us know if it will be extended or not,'” association president Aishah said.

If there is no extension to the deferment of the new excise duty regulations, car prices will increase from 2023, she added.

The change in price calculation methodology was originally planned to take effect at the start of 2020, and the uproar from both industry players and consumers led the then-government to reverse the move and announced an exemption for one year until the end of 2020.

The Malaysian government’s change of the OMV calculation methodology in 2020 meant that the value computed to determine duties will take into account not just profit and general expenses incurred in the manufacture of the vehicle, but also of its sale.

This also applies to areas such as advertising and marketing, warranty and trade royalty, plus wages and commission. Also part of these are general and administrative expenses such as rental, utilities and office supplies, among other costs, all of which increases the vehicle’s OMV and applicable excise duty.

“We have already submitted a proposal to the ministry of finance (MoF) to revert to the previous policy which did not include non-manufacturing related costs in calculating the OMV, in turn lowering car prices,” Aishah was quoted by Bernama as saying after the association’s annual general meeting. The MAA has yet to receive a reply from the MoF, Aishah said.