KUALA LUMPUR, June 15 — RAM Ratings Services Bhd has projected that the total industry volume (TIV) for the automotive sector for 2022 could further rise to about 630,000 units if the Sales and Services Tax (SST) exemption is extended.
The SST exemption is due to end on June 30, 2022.
RAM Ratings rating specialist Ben Inn is hopeful the government would extend the SST exemption which may continue in its current form or at reduced rates such as 50 per cent, 25 per cent and zero per cent.
He said the drop in demand is expected after the expiry of the SST exemption as well as a significant fall in sales.
“Nevertheless, the TIV for the second half of this year would be supported by launches of new popular models such as the replacement of Perodua Alza, Honda HR-V, Toyota Vios, as well as a number of less popular models,” he said during a webinar titled ‘RAM Insight Series: Malaysian Automotive Sector — Has the Worst Passed and What’s Next?’ today.
Furthermore, he said sales were still expected to be supported by bookings made in the first half, as new orders picked up amid the year-end promotions.
“We view the drop in demand to be naturally more severe for cars priced below RM100,000 and premium segment to be less affected as the segment enjoys tax-free for electric vehicles although many models are limited (supply),” he said.
He also noted that car prices are expected to continue rising and are unavoidable due to higher cost of raw materials, parts and logistics, as well as the weaker ringgit.
“Consumers’ demand for cars will also be dampened by higher inflation, concern on the economy, tighter financing and higher cost of car ownership from rising interest rate and fuel subsidy rationalisation.
“All things considered, we believe TIV of 600,000 units in 2022 is possible, however, (it is) dependent on the availability of critical parts and foreign workers,” he said.
Earlier in January this year, the Malaysian Automotive Association (MAA) has forecast a 17.9 per cent growth in TIV to 600,000 units for 2022 from 508,911 units recorded in 2021.
On the outlook for next year, he said TIV for 2023 would be weakened by up to five per cent year-on-year, dampened by rising cost of car ownership and cost of living, as well as uncertainties in economic growth.
“Some of the headwinds from 2022 are likely to continue into 2023 such as rising car prices, potentially tighter financing, higher cost of living, concern on economic growth, weaker ringgit and higher car ownership cost,” he added. — Bernama
