Malaysian Market Could Face Slowdown Due to Tax Change
Prices of 29 car models from 11 brands in the country dropped between 3% and 17% last year and consumers can expect further reductions this year, an International Trade and Industry official says.
Sales of new vehicles in Malaysia could slow down at year’s end as consumers await the introduction of a goods and services tax (GST) in 2015 they hope will result in vehicle-price reductions.
The government is abolishing the 10% sales and services tax April 1 and will replace it with a 6% GST.
In a website report on the change, PricewaterhouseCoopers says the existing sales and service tax is levied at only one stage of the supply chain, while a GST is charged on the consumption of goods and services at every stage of the supply chain, with the tax burden ultimately borne by the end consumer.
Frost & Sullivan is sticking to earlier projections of a strong second half. Asia Pacific Automotive Practice Associate Director Dushyant Sinha tells The Star newspaper potential car buyers could adopt a wait-and-see stance as they are unclear about how the change will affect them.
“However, towards the year-end, we expect aggressive sales campaigns from original equipment manufacturers to push sales further,” Dushyant says. “This should stimulate demand. As such, we do not expect any major impact on prices due to the implementation of GST.”
Malaysian Automotive Institute CEO Madani Sahari tells the newspaper the public still needs more clarity on the GST.
“People still don’t quite understand how it will impact them,” he says. “But I don’t think there will be (an impact), as I think it will help to reduce car prices.”
Meantime, the Business Times reports prices of 29 car models from 11 brands in the country dropped between 3% and 17% last year and quotes International Trade and Industry Minister Mustapa Mohamed as saying consumers can expect further reductions this year.
Mustapa says the 29 models covering 58 variants accounted for 344,456 units, or a 60% share of the market last year.
The average car price reduction was 4.97% last year and Mustapa predicts another 5% drop this year.
“We are confident that we can meet the 5% target this year, according to the timeline under the National Automotive Policy, until 2017,” he says.
Mustapa says so far this year, five new models, including the Perodua Alza and MyVi, and Proton Exora, have been launched with lower price tags.
Prices for the Perodua MyVi, Malaysia's top-selling model, have fallen 9% overall, “which is a steep reduction, as we were expecting an industry average of a 5% reduction per annum,” Mustapa says.
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