OEMs unable to finalise vehicle prices following SST as discussions with Customs are ongoing

By RAHIMI YUNUS / Pic By MUHD AMIN NAHARUL

Carmakers are still at odds over vehicle prices under the new consumption tax due to computational differences based on the Royal Malaysian Customs Department’s guidelines.

With the Sales and Services Tax (SST) set to come into effect in a few days, consumers are in the dark of what would be the new car prices post Sept 1.

Industry sources said original equipment manufacturers (OEMs) are unable to finalise their final vehicle prices following the SST as discussions with Customs are ongoing.

The tax authority released the SST guidelines to the OEMs on Aug 23, which was sighted by The Malaysian Reserve (TMR).

One industry source said automotive players have requested the authority to review the computational method in order to reduce the prices of vehicles. “Customs told us the prices would increase between 1% and 2% (from the previous prices under the Goods and Services Tax or GST).

“But industry players’ calculations showed the increase would be more than 2%. We are ‘negotiating’, but Customs is seemingly just ignoring us,” the source told TMR.

The industry source highlighted that the sales tax calculation does not consider the industrial linkage programme (ILP) as Customs has said that the matter is under the Ministry of Finance. The source said the ILP will be included in the excise duty computation, which lowers the charge, but not for the sales tax.

ILP is a tax exemption given to manufacturers who set up operations in the country.

The levy exemption varies based on the local input used in the manufacturing and assembling of a product. In the past, some OEMs have been importing parts and using them in cars assembled in the country, enjoying hefty savings on their duties.

A source said they are still waiting for the final confirmation from Customs of any changes before they can fix the prices.

Meanwhile, another industry player who declined to be named said all the noises may have originated from foreign automakers who want to protect their status quo.

“It is already decided. No negotiation. The government needs to collect money. I think the foreign OEMs are the ones who are making all the noise. The national car companies are okay,” the source told TMR.

Customs DG Datuk Seri Subromaniam Tholasy did not immediately reply to a text message over the car prices.

A few car sales consultants contacted are also waiting for the finalisation of prices before they can approach prospective buyers.

“I am not sure yet because we have not gotten the latest price list. Maybe next month,” a sales consultant told TMR.

Another sales consultant, who is a full-timer for the Perusahaan Otomobil Kedua Sdn Bhd (Perodua) brand, said the price list might only be received later.

For the national car, news reports suggested that Proton car prices will increase between RM1,500 and RM3,000, while Perodua’s are expected to jump by RM5,000 to RM6,000, according to sources.

Rumours also linger that some brands will maintain the same prices as with the previous GST.

Carmakers have posted new record sales in recent months after the consumption tax was zero-rated. New vehicle sales jumped to 68,465 units in July, 3,963 units more than the 64,502 units recorded in June.

New vehicle loan applications rose to a record high in recent times as buyers flooded showrooms. August numbers are expected to continue the trend.