Tax Holiday Expected to Spur Malaysian Auto Sales

New-car sales in Malaysia are expected to soar over the next two to three months after the May 9 election of a coalition government promising to abolish the country’s goods-and-services tax.

It was the first change of government since Malaysia’s independence in 1963 and retired Prime Minister Mahathir Mohamad stunned ruling circles in coming back to be the world’s oldest elected leader at age 92.

The 6% GST is being abolished, and there will be a 2- or 3-month tax holiday before a 10% Sales and Services Tax is reintroduced.

Malaysian Automotive Assn. President Aishah Ahmad says she expects car sales to surge as a result of the changes.

“Car companies that have stocks in hand will benefit the most, as bear in mind that building cars will take time,” Aishah tells The Star newspaper.

Perodua is offering GST rebates of 2,172 ringgit ($545) for a 1.0L Axia SE and MYR3,114 ($782) for its best-selling 1.5L Myvi Advance.

Even before the GST was officially scrapped, Proton, founded by Mahathir during his first stint as prime minister, was offering service vouchers or cash rebates for the difference between the pre- and post-GST prices for cars bought from May 16 to May 31.

Honda Malaysia announced savings of up to MYR9,042 ($2,271) for a 1.5L Honda City V grade, and up to MYR10,628 ($2,670) for its HR-V.

Toyota buyers can get savings of MYR6,500 ($1,633) on a 2.4L HiLux double-cab pickup and MYR5,000 ($1,256) for a 1.5L Vios.

The price of the 1.4L turbocharged VW Jetta has been cut MYR7,500 ($1,884), while a BMW 118i Sport’s price is reduced MYR9,991 ($2,510).