Aishah said the stellar performance in 2022 can also be attributed to pent-up demand for new vehicles that was seen, especially during the first half of last year.
PETALING JAYA: The Malaysian Automotive Association (MAA) expects vehicle sales to drop 9.8% to 650,000 units this year following the record-high total industry volume (TIV) of 720,658 units last year.
MAA president Datuk Aishah Ahmad said the primary reason for the drop in TIV is the end of the sales tax exemption on March 31, 2023.
“We are saying that people have brought forward their purchases because of the sales and service tax (SST) exemption.
“This is coupled with an economic slowdown which is expected worldwide, so people will be more cautious about buying cars this year,” she said at a media briefing yesterday.
As car buyers have until the end of March this year to capitalise on the tax exemption, Aishah expects TIV to remain stellar during the first quarter of 2023.
“The first quarter of 2023 will still be fine but after that, we will see a year-on-year (y-o-y) drop from 2022. Most of the rush for passenger vehicles’ outstanding orders, especially (in the first quarter), is due to the SST exemption.
“There are some companies that are not able to fulfill these orders by March due to supply chain issues and component shortages,” she said.
The total registration of new passenger vehicles in 2022 rose 41.8% y-o-y to 641,773 units, while the commercial vehicle segment registered a strong y-o-y growth of 39.9% to 78,885 units.
“The improvement in sales of commercial vehicles was due to increasing demand as companies began to invest in anticipation of an economic rebound after two years of slowdown as a result of the Covid-19 pandemic,” said Aishah.
The monthly TIV reached its peak and all-time high in December 2022, when a total of 76,657 vehicles were registered.
Aishah said the stellar performance in 2022 can also be attributed to pent-up demand for new vehicles that was seen, especially during the first half of last year.
She also said there was a low-base effect from 2021, especially during the first half of the year, as a result of multiple lockdowns that disrupted business operations.
Additionally, Aishah said she did not think the government would be able to extend the SST exemption incentive for now, given its tight finances.
“Some automotive manufacturers have announced they would absorb the SST but for how long, we don’t know.
“The lower-end cars are fine but for the more expensive models, it would be too much to absorb.”
The MAA forecasts TIV growth to return to the mean level of about 1% to 2% y-o-y every year from 2024 to 2027.
On the development of the electric vehicle (EV) sector in Malaysia, Aishah said the MAA has lobbied to the government to grant more support to this segment.
“We have appealed for road taxes to be restructured and registration fees to be reduced.
“We also hope the government will subsidise the EV infrastructure development, since it is costly. So there must be some assistance from the government to further develop EVs here,” she said.
Aishah said the extension of duties and tax for EV purchases should be done with a longer-term view in mind.
“An extension that is announced yearly is not good enough. We are asking that these be continued until 2030.
“It has to be a longer timeframe, as this is an area where a lot of investments are needed and all these investors need assurances that EV sales will continue to do well,” she said.
