The Malaysian Reserve

Car sales jump as retailers ride on the feel-good tax-free period

KUALA LUMPUR, JUNE 26, 2018 : Tourist seen at Pavillion Kuala Lumpur(Pic by Afif Abd Halim/TMR)

The automotive sector is the main bene ciary of the zero-rated GST, according to MRCA

by FARA AISYAH / pic by AFIF ABD HALIM

Retailers are seeing booming transactions with the automotive sector chalking impressive sales as consumers seek to maximise the zerorised Goods and Services Tax (GST) implemented since early this month.

Malaysia Retail Chain Association (MRCA) newly re-elected president Datuk Seri Garry Chua said the automotive sector is the main beneficiary of the 6% reduction in consumption tax as it offers buyers the largest savings.

“(It’s) almost one month since the zero-rated GST and many of our members have recorded improved sales. It is a good sign for the industry. It was also because of the festive season.

“Hopefully, the positive sentiment will continue towards the end of this year and the next,” Chua told reporters at an MRCA press conference in Petaling Jaya yesterday.

Retail Group Malaysia had reported a 30% sales increase since the government decided to do away with the levy for sales of products and services.

The Malaysian Reserve earlier reported that car sales could rise as high as 50% following the zeroGST announcement.

The Hari Raya celebration has also traditionally been a good time for car sales. Car companies have reported higher footfall at showrooms and promotional events.

Proton Holdings Bhd VP of sales and marketing Abdul Rashid Musa said car bookings and dealership visitations have risen 50%, attributing it to the new tax rate and Hari Raya promotional campaigns.

However, vehicles sales dropped 15% to 42,983 units in May compared to 50,594 units recorded a year ago as consumers delayed their purchases to enjoy consumption tax-free prices.

The Malaysian Automotive Association (MAA) said the announcement of the zero-rated GST on May 16, 2018, had resulted in market uncertainty.

“Many customers were holding back on the purchase and registration of new vehicles,” said MAA.

Chua said MRCA’s target for Malaysia’s retail sales growth for the year remains at 4.5% compared to the 2% rise last year, based on the excitement of the three-month tax holiday.

The 470-member association also targets a 30% growth in franchise retail by 2020 as the number of franchise groups currently make up about 10% of the retail sector.

Chua is confident that the Sales and Services Tax (SST) will be reintroduced at a “modified” rate to ensure prices of goods remain low.

“The consumer sentiment is very important. That is why the government has to keep it going positively even with the implementation of the SST.

“That is why I believe the SST will be rated at a positive rate that will drive the economic sector. The government is so determined to make sure prices are going down,” he added.

The previous 6% GST rate had been blamed for the muted consumer sentiments and deteriorating sales for retailers.

The government had collected RM44 billion from the tax last year alone.