Malaysia February Sales Stall Ahead of Tax Change

Malaysia’s new-vehicle sales eased 0.6% in February to 50,390 units as consumers held off buying, hoping for a price drop with the introduction of a new goods and services tax.

The 6% GST takes effect April 1 and the 10% vehicle sales tax is abolished the same day.

Customs Director-General Khazali Ahmad says consumer doubt over whether car prices would rise or fall resulted from confusion among dealers as to how they were going to dispose of the vehicles for which they had already paid the vehicle-sales tax.

“The Customs will reimburse the dealers the 10% tax once they produce documented proof that they have paid the tax but had yet to sell the vehicle as of March 31,” Khazali tells the government’s Bernama news agency.

Still, Kuala Lumpur and Selangor Car Dealers and Credit Companies Assn. President Khoo Kah Jin says he doesn’t expect a significant drop in vehicle prices, predicting the tax savings will be offset by the prices of imported-vehicle components due to a higher exchange rate.

“The vehicle prices will go down by between 2% and 3% with the GST,” he tells Bernama. “However, the prices may increase slightly depending on the foreign exchange rate because most vehicle components are imported, for example, from the U.S., Europe and Japan.”

Meantime, the Malaysian Automotive Assn. says February new-car deliveries dropped 1.7% year-on-year to 44,917 units. This offset a 9.1% increase in commercial-vehicle sales to 5,473 units.

Vehicle production fell 1.5% during the month to 46,958 units, with car production up 2.2% to 44,023 units and CV output off 36.0% to 2,935.

The MAA says it expects sales to edge higher in March as car companies launch deals aimed at clearing stock before the GST arrives.

Meantime, Ford reports its best-ever February sales performance in Malaysia with sales up 66% year-over-year to 1,249 units.

Ford Malaysia Managing Director David Westerman says the surge was led by the Ranger pickup, which saw deliveries jump 104% to 966 units.

He tells Bernama the arrival of the GST will not affect Ford’s plan to continue introducing new models in Malaysia. Bowing this year are the Mondeo midsize sedan, Everest SUV and Mustang.

Elsewhere, the Malaysian Automotive Institute says it expects lower prices from the tax change to boost Malaysia’s full-year sales to 700,000 units this year from 656,000 units in 2014.

“We don't see the reason why demand for cars would drop following (enactment of) the GST,” CEO Madani Sahari tells Bernama.