SEREMBAN, Sept 26 — The three-month tax holiday between the abolishment of Malaysia’s controversial Goods and Services Tax (GST) and the kicking in of the new sales tax regime on Sept 1 had seen soaring sales for new vehicles.
But not all is well, with the spike in demand resulting in a long waiting list for cars.
Everlyn Kan, 40, has been waiting for the delivery of her new Perodua Myvi since mid-June.
She paid RM300 (S$99.14) to book the hatchback but has yet to take delivery.
The car retailed at RM57,000 when the GST was in place. It retailed at RM53,000 during the tax-free period.
“I called the salesman a few times and they keep delaying the delivery date, citing overwhelming orders. The last time I called, they say I may be able to get my car sometime next month,” the accounts clerk told TODAY.
Kan is among droves of Malaysians who celebrated the Pakatan Harapan government’s move to zero-rate the unpopular GST on June 1, by buying big ticket items such as cars ahead of the return of the Sales and Services Tax (SST).
The SST replaced the 6 per cent GST introduced by the previous Barisan Nasional government in 2015. Prior to the GST, Malaysians were subject to the SST, which was at 10 per cent rate.
The new SST however, impose a tax of between 5 per cent and 10 per cent on the sale of goods, while services attract a 6 per cent levy.
While the percentage charged on goods under the new SST regime appears to be higher than under the old system, a total of 5,443 items are now exempt, compared with 544 items under GST.
Car salesmen recounted how they did their best business in years during the three-month tax holiday.
“We didn’t have to do anything and customers were streaming into our showroom non-stop,” said Navin Wu, a sales adviser with a Honda dealership in Seremban, Negri Sembilan.
During the tax holiday, his company recorded an average of 250 bookings per week. In contrast, they received an average of 350 bookings a month when the GST regime was in place.
The spike in sales was due to the drop in prices — by thousands of ringgit — during the tax-free period.
For example, the Honda City sedan — a firm favourite among Malaysians — retailed at RM87,000 during the tax holiday. The same car was previously sold at RM92,000 when the GST was in place.
Post tax holiday, it now retails at RM89,000.
Under the new SST regime, sales have slowed, said Wu, but he expects the figures to recover in the next few months.
“People are still adjusting that there is a tax now (after the tax holiday)... but the retail price is still cheaper compared to during the time when we had GST,” he said.
Car broker Halid Abdullah added that the sudden growth in demand has resulted in long waiting lists for new cars as manufacturers could not produce or import them fast enough.
“On average, customers (now) need to wait at least two months for their cars,” he said.
Meanwhile, second hand car showrooms have benefitted from the situation.
Some consumers who could not wait that long have turned to used vehicles, especially since no SST is levied on them under the new regime.
“During the initial three-month tax-free honeymoon, we suffered as people were going in droves to buy new cars. But now our business is picking up as people who can’t wait long for their cars turn to us instead,” said CA Koh, a second-hand car dealer from Johor Bahru.
As a result, he has seen his sales go up from an average of 25 vehicles a month to 30 this month, with most people going for “one- and two-year-old used cars”.
Lee Heng Guie, executive director of independent research house Socio-Economic Research Centre, said this was an unforeseen effect of the SST.
“Hopefully car prices can further decrease via some government exemptions and this will help pass on savings to consumers,” he said.
Oh Ei Sun, senior adviser for international affairs at the Asian Strategy and Leadership Institute in Kuala Lumpur, reiterated that one of the intended aims of the PH government is to make certain items affordable for the lower-income people.
“This is in line with their pledge of keeping the cost of living in check. At the same time, the government should pay attention to improve public transport to reduce people’s dependence on private vehicles,” he said. — TODAY