The Malaysian Automotive Association (MAA) is appealing to the Malaysian government for the extension of the current sales tax exemption, which will end June 30 this year. “The MAA has appealed to the finance ministry to extend the sales tax exemption, but so far, we have not received any feedback,” MAA president Datuk Aishah Ahmad told The Star.
The local automotive industry could see a surge in sales for the months of May and June as there remains less than two months to go with the sales tax exemption, Aishah said.
Meanwhile, RHB Investment analyst Jim Lim said that vehicle sales in the second quarter of 2022 is expected to be strong as customers are expected to try and take advantage of the remaining sales tax exemption period.
“From the latest March production figures, we can see that carmakers are ramping up production to the best of their abilities, and amidst chip and parts shortages, to help customers take advantage of the sales tax exemption before it ends,” Lim said.
“When the government zero-rated the goods and services tax (GST) for three months in 2018, the temporary tax holiday created a huge surge in demand for cars,” The Star quoted an industry observer as saying.
Many just wanted to capitalise on the lower prices, but when the tax holiday ended, vehicle sales immediately plunged, not just because prices [then became] higher, but because nobody wanted to buy [cars] anymore. For months after the tax holiday ended, many auto companies were struggling to sell new cars,” the industry observer added.
As for the June 20 SST holiday cut-off, the more affordable brands such as local makes Proton and Perodua are more likely to face a larger impact as their customers are more price-sensitive, while conversely premium brands are likely to be less affected, said Lim.
The zero-rated GST pricing structure took effect on June 1, 2018, resulting in a 50% jump in vehicle sales compared to the preceding month which was also a result of customers holding back on purchases in wait for the prices at zero-rated GST. This brought the second-best ever monthly TIV in Malaysian automotive history.
This was followed thereafter by sales and services tax (SST) which took effect September 2018, and vehicle deliveries were 52% lower that month (31,241 units) compared to August 2018 (65,551 units). The MAA attributed the decline to car companies depleting vehicle stocks due to overwhelming demand in the zero-rated GST period.
More recently, vehicle sales in Malaysia for the month of March 2022 saw a total of 73,222 vehicle deliveries that month, which was up 28,171 units or 62.5% over the monthly tally from February.
Compared to the same month last year, March 2022 vehicle sales were 12.76% (8,284 units) higher, while the year-to-date total for the first three months of the year was 159,752 units, or a gain of 7.8% (11,597 units) compared to the same period last year.
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Regardless of the SST re-introduction date, we are going to see a rise in automobile and spare part prices across the industry for the next 2-3 years. This is caused by
1) the rise in prices of commodities used as components of automobiles, such as iron ore (for steel) and petrochemicals (for plastic)
2) the rise in prices of commodities used for the production of automobiles, such as oil/gas/electricity used in the factory during the manufacture
3) the rise in diesel prices, which are used for the transportation of raw materials and finished goods
4) the shortage of raw materials for semiconductor manufacturing, which are used for chipsets will lead to some compromises on the part of the manufacturers, perhaps in functionality, or higher costs.
Unfortunately, I don’t believe there is any way to escape this. The worst situation is not higher prices but spare parts not being available; your car will be sitting at home or in the workshop, un-usable.
Don’t buy!!
Take public transports
MRT1/2/3 LRT1/2/3
ECRL HSR KTM RapidKL
AirAsia MAS Malindo FF buses
Might as well make the SST tax exemption permanent seeing how beneficial it is to the sales of new vehicles instead of u-turn or going round the roundabout.
After that, rakyat will suffer
If this works for automotive, might as well make SST exempt for everything then raise kawkaw income tax and corporate tax.
Message to MAA: Need to understand why disagree on sst tax exemption extension again. This is because the most important is that service is the most top priority instead of keep selling cars. The more they sell cars more but the service will slowly decline. Govt also need money to pay oil subsidy, salary, important necessities. Please don’t be so selfish
Govt always got their ways to raise revenue la. GST, new projects, new railroads, and just keep borrowing then hire more govt servants to serve U better
Well the Proton X50 have 100,000+ bookings and delivered 28,774 units in 2021 (meaning 28,774 / 15 months starting from Oct20) = 1918 units / month.
100000 / 1918 = 52 months – 15 months = 37 months (approximately 3 years). So why don’t you just extend SST Exemption until end of 2025?
Worst still, extend till 2025, rakyat will suffer more
Datuk Aishah,what if chip shortage spilled over to 2023 ?
Just tell your MAA members to absorb 30-70% of the SST instead of asking for multiple extensions.
Rakyat know gomen is subsidising Ron 95.
If you keep on asking for tax holiday,Menteri Mustapha will say ,enough is enough ..only B40 gets targeted fuel subsidy.Then all Hell will break loose.
No need to extend! It’s already enough. I always drive from home to college in morning and from college to home in evening everyday. By right I should reach there my own actual time but always having more jams that I have to reach at delaying time instead. Think for others including myself, Datuk Aishah.
No answer means rejected lor… If ok to extend then won’t early early announce it won’t be extended. Don’t think he’s trying to pull an ass of himself for u turning this decision
With the current situation, the backlog order cannot be resolved by the end of 2022. It should extend until the end of 2023.
But rakyat will suffer if extend more
why?
Then rakyat will be more angry if keep on extending.
Thanks to mother Russia everything will be more expensive…
I think it’s a good idea to incessantly extend the exemption, and to only make instalment announcements once six-monthly to keep the purchasers in suspense to rush to catch the deadline. In so doing, it’s a clever trick of both the government and MAA members making huge money. For the government coffer the forego of SST means losses of the meagre 3 % in car pricing, but various other taxes collected in the car manufacturing process in its stages and eco-system in turn will easily make up much more for such loss. Those combined taxes will easily amount to more than 40 percentage of the car pricing (what about the corporate taxes by the lhdn). On top, the B40 will benefit from the lower second hand car price in in the market as more used cars would be traded in and flood the market, thereby the supply chain for the used car would remain ease vs demand. A triple win-win scenario is then created – more income for the government, MAA members, and a more affordable secondhand car market would be available to B40 group.
This is not GST era. Many of the supposed taxation in the manufacturing processes are murky or hidden so the only visibility on Govt to collect taxation is at the final SST point which becomes moot when Govt are giving SST exemption so in effect Govt are losing massive amount of income from this scheme.
Basically humans. Those who has bought the car during the SST Exemption will ask to stop extending so they don’t feel stupid. Those who haven’t buy the car and is looking forward to get one for economy reopen will ask for extension.
Why so pessismistic .. daddy chill we know human well enough have faith
Hopefully can be extand the sales tax examption period because for those already booking car on Jan2022 still not yet get the car. rakyat will suffer more if have this sales tax.. Please consider the voice of the Rakyat.