Carmakers surprise market with lower prices under SST

Perodua, Honda and VPCM were the only 3 manufacturers that had announced the new prices


While the automotive market is largely uncertain over the new prices of vehicles with the reintroduction of the Sales and Services Tax (SST), a few carmakers have announced prices which are lower compared during the period of the unpopular consumption tax.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua), Honda Malaysia Sdn Bhd and Volkswagen Passenger Cars Malaysia (VPCM) were the only three manufacturers that had announced the new prices, while other companies remain fuzzy over the matter.

Malaysian Automotive Association president Datuk Aishah Ahmad (picture) told The Malaysian Reserve (TMR) that carmakers are still seeking clarifications from the Royal Malaysian Customs Department over SST’s formula.

On-the-road prices for the completely-knocked down (CKD) units will be lower under SST compared to the Goods and Services Tax (GST), while the completely built-ups (CBUs) would be higher, she said.

The delay in the release of the new prices could be related to the industrial linkage programme (ILP) component in the calculation of the new sales tax.

Mercedes-Benz Malaysia Sdn Bhd VP of sales and marketing passenger cars Mark Raine told TMR that the prices of the company’s models are not confirmed yet as they depend on whether the models are of the CKDs or CBUs, on top of the ILP effect.

Volvo Car Malaysia Sdn Bhd and UMW Toyota Sdn Bhd were also unable to confirm new prices of their models yet.

TMR had earlier reported that the ILP was one of the hotly contested elements between the carmakers and Customs.

Written approval for inclusion of the ILP in the computation was only received from the Ministry of Finance on Aug 30, as sighted by TMR.

One industry source said the inclusion of the ILP was one of the determinants that have led to the lower car prices.

For now, carmakers that had released the new prices have also beaten the general expectations that it would go higher with SST.

Perodua announced a price reduction of between 1% and 3%, citing almost all of its models would be cheaper under the new tax structure.

All analysts who were contacted by TMR said they were surprised by the cheaper Perodua cars with SST.

“I think if Perodua does this, others will follow including the entry and mid-range. Premium cars are the least affected,” Affin Hwang Investment Bank Bhd analyst Brian Yeoh said to TMR.

Similarly for Honda cars, which is the second leading brand after Perodua, are now cheaper between RM2,268 and RM4,509, except for its two CKD models Odyssey and Civic Type R.

VPCM has revised its car prices downwards with the implementation of SST, except for its CBU models, from 1.5% (for Tiguan Comfortline) to 2.6% (for Vento Highline).

Meanwhile, Proton Holdings Bhd, the third original equipment manufacturer next to Honda in terms of market share, announced that it will absorb the SST charge for all car models in September 2018 to ensure buyers can still benefit from the tax-free price of its cars.

While the uncertainty in the market still exists, all automotive players said they will release the updated prices in the coming days.