KUALA LUMPUR, April 23 ― Car sales in Malaysia has stalled in the first two months of 2015 due to the introduction of goods and services tax (GST) and rising household debts, Financial Times’ (FT) research service Asean Confidential said in a recent report.

With zero growth in that period, the numbers in Malaysia reflected similar trends of scaledown in Southeast Asian’s top five countries ― also including Indonesia, the Philippines, Thailand and Vietnam ― where car sales fell 6.2 per cent compared to the same period last year.

“Where have the aspiring buyers in the biggest markets gone? In both Thailand and Malaysia, household debt has climbed to nearly 90 per cent of gross domestic product (GDP), limiting the ability of many families to make new credit purchases,” said a report by FT.

Household borrowings in Malaysia is among the highest in Asia. Data from Bank Negara Malaysia shows that consumer debt reached 86.8 per cent of GDP at the end of 2013 from 80.5 per cent in 2012.

“Malaysians have also adopted a wait-and-see approach to auto purchases due to a new goods and services tax, while Thailand will need a few more years to digest the vehicles purchased under its first-car scheme,” FT added.

Malaysia introduced a 6 per cent consumption tax from April 1 this year.

According to Asean Confidential’s survey, demand for cars in the five countries will remain cold in the second half of 2015, as prospective buyers in every country except Vietnam said that they planned to scale back purchases.

Sales growth in Indonesia and Thailand, the two largest markets in the region, have severely contracted by 6.2 per cent and 11.8 per cent respectively.

In comparison, sales dropped by 10.6 per cent last year, even as most of the countries charted GDP growth between 5 and 6 per cent. Sales in Malaysia only grew by 1.6 per cent in 2014, FT said.

Asean Confidential’s brand survey showed that market leaders Toyota and Honda will receive the most impact from the region’s slower sales, followed by Nissan, Ford and others.

Think tank Malaysian Institute of Economic Research’s (MIER) revealed yesterday that Malaysian consumers’ confidence in the economy and their personal welfare hit its lowest level in six years prior to the implementation of the GST.

MIER also predicted that consumers will hold back on their spending in the coming months, especially on items such as houses and cars.