Malaysian car buyers await GST hoping new tax will result in lower prices

PETALING JAYA - The implementation of the goods and services tax (GST) in 2015 could result in potential car buyers adopting a wait-and-see stance towards the end of this year as they are still unclear about how it would affect them.

Frost & Sullivan Asia Pacific automotive practice associate director Dushyant Sinha said customers were likely to adopt a cautious approach, closer to the GST implementation, hoping for reduction in car prices.

"However, towards the year-end, we expect aggressive sales campaigns from original equipment manufacturers (OEMs) to push sales further.

"This should stimulate demand. As such, we do not expect any major impact on prices due to the implementation of GST," he told StarBiz.

Malaysian Automotive Institute chief executive officer Madani Sahari, meanwhile, said the public still needed more clarity on the GST.

"People still don't quite understand how it will impact them. But I don't think there will be one (an impact) as I think it will help to reduce car prices," he said.

The sales and services tax will be abolished on April 1, 2015 and replaced with the GST, which has been set at 6 per cent.

An analyst also agreed some potential customers might adopt a "wait-and-see approach," but believed that it would not increase car prices.

"The GST, which will replace the 10 per cent sales tax next year, is set at 6 per cent and should reduce car prices," he said.

According to the Malaysian Automotive Association (MAA), vehicle sales in the first quarter of the year rose to 159,910 units from 157,734 in the previous corresponding period.

The MAA has forecast total vehicle sales to grow 2.2 per cent to a new high of 670,000 units this year.

Dushyant said vehicle sales so far had shown positive growth.

"New vehicle sales grew by 1.4 per cent in the first quarter compared with the same period last year. Growth was entirely driven by passenger cars as new model launches, like the new Honda City, Toyota Corolla Altis and Perodua Myvi XT. Aggressive promotions from OEMs and Chinese New Year festivities pushed demand.

"The withdrawal of completely-built-up incentives on electric vehicles and hybrids did have a restraining impact, or else the growth would have been much more," he said.

Under the National Automotive Policy 2014, which was announced in January, the excise duty exemption was only given to locally-assembled hybrid and electric cars. The exemption for hybrids will end on Dec 31, 2015 and for electric cars on Dec 31, 2017.