Firm does not see any drop in the TIV because of the SST, neither a huge increase in the market

by AFIQ AZIZ / pic by BLOOMBERG

VOLKSWAGEN Passenger Cars Malaysia Sdn Bhd (VPCM) expects the country’s car market to plateau this year in the absence of catalysts like the tax-free period last year, which saw car loan applications rose to record high.

VPCM MD Erik Winter said although the simplified mechanism of the Sales and Services Tax (SST) and higher localisation content for vehicles had helped reduce car prices, consumers had rushed to buy vehicles during the tax holiday period.

“In that short period of three months, where there is no Goods and Services Tax and SST, there was a rush in sales. Even when we were running out of stocks and clearing our showroom.

“However, we still believe that this year, stated by the Malaysian Automotive Association (MAA), we do not see any decline in the total industry volume (TIV) because of the SST, neither a huge increase in the market. We assume the market would be stable compared to 2018,” he told reporters in Kuala Lumpur yesterday.

The government abolished the multilayer consumption tax in June last year and introduced the SST in September.

The SST has simplified the taxation process which lead to savings, allowing car prices to be lowered.

According to MAA, 598,714 vehicles were sold last year, a 3.8% increase compared to 2017. Passenger vehicles contributed 533,202 units of the total sales, 3.6% higher than the year before.

Winter said the Volkswagen (VW) market share has increased by 1.3% last year, compared to 1.18% in 2017.

Last year, VPCM sold 7,001 units of car, a 15.8% increase from 6,536 in 2017.

In 2012, the carmaker sold more than 13,000 cars in Malaysia, almost doubled of what it delivered in 2011.

In 2013 and 2014, the company sold about 9,500 and 8,916 units of vehicles respectively.

Winter said VPCM may take a while to achieve similar performances.

“It is a different situation and different line of product that we have now. We could see the repeat repairs of our products have declined by 98% compared to 2014,” he said, referring to the gearbox issue on selected models which had dented the VW brand and its sales.

He said the company is looking forward to reaching almost zero repeat repairs in the future.

“We are doing everything to come back again, but it needs time and a lot of attention and support from the dealers network,” Winter added.

It was recently reported that one of the VPCM 4S (sales, service, spare part, body and Paint) outlets in Selayang and 3S service centre in Petaling Jaya closed down last month.

Winter said these exercises are part of the company’s effort to consolidate its dealerships.

“What we are showing is equally important that it has shown quality (improvement) in our dealer network because we do not want customers to come to our workshop and drive out by having the same problem again,” he said.

He said currently, there are nine 4S service centres and 15 3S outlets ready to serve VW’s customer nationwide. The company has no plan to expand the number of outlets.

As of the first quarter this year, he said VPCM sold around 1,800 cars, higher than the 1,497 units recorded in the same period last year.

Winter said VW is also expected to introduce two new models in the second half of this year — the new B8 VW Passat and VW Arteon, the brand’s flagship model.