MAA will discuss the matter with its members and try to apply for the extension at a later date, says president
By S BIRRUNTHA & AZALEA AZUAR / Pic By RAZAK GHAZALI
THE Malaysian Automotive Association (MAA) has no immediate plans to apply for an extension of the sales tax exemption for passenger vehicles as it expects vehicle sales to remain strong in the first half of 2021 (1H21).
Its president Datuk Aishah Ahmad, however, said the association will discuss the matter with its members and try to apply for the extension at a later date.
She said MAA expects total vehicle sales to record a stronger figure in 1H21 versus 2H21 helped by the sales tax exemption incentive.
“The extension of incentives under the short-term National Economic Recovery Plan (Penjana) until June 30, 2021, has definitely played an important role in boosting vehicle sales and demand for 1H21.
“There is a possibility we will see sales decreasing within three months after the tax exemption ends before it increases again. At the moment, we have not submitted any application to the government to extend the tax exemption further,” she said at a press conference after MAA’s AGM last Friday.
The Finance Ministry in December last year announced the extension of the automotive sales tax exemption period by a further six months till June 30, 2021. The initial period of the tax exemption was from June 15 until Dec 31, 2020.
Aishah expects total vehicle sales for March to increase from February, as most Japanese carmakers have stepped up their delivery efforts to garner positive data for annual financial results which end in March.
She said Road Transport Department’s move to resume services, including vehicle registration transactions, has also helped drive sales in March.
MAA has maintained its total industry forecast of 570,000 vehicles for 2021 despite lower sales registered in January and February, following the reimplementation of the Movement Control Order (MCO).
“The Penjana initiative has helped boost demand for vehicles. Therefore, we hope the sales volume will improve in the coming months,” Aishah said.
She also expects economic recovery, coupled with lower hire purchase loan interest rates, to spur automotive sales this year. The introduction of new models at very competitive prices will also assist in sustaining buying interest, she added.
“We believe aggressive promotional campaigns by car companies to maintain their market share can help push sales. Hence, we are optimistic the local automotive market will rebound in 2021,” she said.
The local automotive market registered a total industry volume (TIV) of 529,434 units in 2020, a decrease of 74,847 units or 12.4% compared to 604,281 units in 2019.
Vehicle sales volume rose 4.13% year-on-year (YoY) to 42,784 units in February 2021 compared to 41,088 units in February 2020, as traffic volume at showrooms showed better improvement after the lifting of MCO in certain states.
The sales volume was also 30.3% higher than the 32,829 units recorded in January 2021.
Hong Leong Investment Bank Bhd analyst Daniel Wong, in a recent note, forecasts TIV to increase by 10.6% YoY to 585,000 units in 2021.
MIDF Amanah Investment Bank Bhd analyst Hafriz Hezry foresees the global chip shortage predicament to persist until the middle of this year. He, however, expects the impact to only affect certain models in the market.