KUALA LUMPUR, Jan 14 — The Goods and Services Tax (GST) will continue to weigh on automotive sales into 2016, Frost & Sullivan said today based its automotive outlook for Malaysia in 2016.
Aside from the consumption tax introduced last year, the firm also said the declining value of the ringgit is contributing to Malaysians’ decision to hold off on vehicle purchases last year and now.
Vice president for mobility Vivek Vaidya, in a media briefing today, said that the decline for 2016 is expected to be 1.44 per cent, with the total sale volume dropping to 648,000 units.
2015 is expected to close with a total sale volume of 657,500 units, a 1.3 per cent decline from 2014.
“Despite several manufacturers reducing the prices of cars after the implementation of GST, the economic downturn, weakening ringgit, and increase in cost of living discouraged buyers from making big purchases,” Vivek said.
For 2016, price increases and a reduction of credit approvals could see further decline in car purchases.
Vivek said that if the crude oil price continues to decrease and the ringgit weaken, it would put “immense” pressure on car manufacturers and component suppliers.
Crude oil price continued to drop this year, forcing Putrajaya to announce a budget revision for the second year running.
However, Vivek said that the Trans-Pacific Partnership (TPP) would be positive for the automotive industry due to greater market access.
“However, whether TPP is signed or not will not have an impact on the 2016 projection,” he said.
