Malaysians slam BRAKES on vehicle buys as GST bites

KUALA LUMPUR - Vehicle sales in Malaysia fell nearly 33 per cent in April following the introduction of the Goods and Services Tax (GST), in a further indication of the effects of the new consumption tax on the economy.

Combined private and commercial vehicle sales dropped from 67,314 to 45,187 during the space of a month, with the main variable being the new tax that replaces the previous Sales and Services Tax (SST).

According to sales data reproduced by automotive news portal Paultan.org, the decline also represented a drop from the same month in the previous year, with automakers selling 13,554 fewer units in April this year versus what they managed in 2014.

National carmakers Proton and Perodua were among the hardest hit, with sales volume falling by 5,556 — over half of what Proton sold the month before — and 4,913 respectively month-to-month following the introduction of the GST.

The top two non-national makes, Toyota and Honda, also saw sharp reductions in sales, losing 1,155 and 3,019 in total monthly sales.

Less popular brands also suffered disproportionate drops, with Ford registering a 79-per cent dip in volume followed by Mitubishi's 73 per cent dip.

Premium brands such as BMW, Lexus, MINI and Volkswagen were able to improve on their March performance, however, suggesting a lower price inelasticity for the segment.

The current best-selling luxury marque, Mercedes Benz, also saw its sales dip by less than 5 per cent month on month.

The drops may be worrying to car makers as they came despite a general reduction in retail prices owing to the SST of 10 per cent being superseded by the GST of 6 per cent last month.

In a statement accompanying the release of the April sales figures, the Malaysian Automotive Association said the fall was due to “adjustment to the post GST environment” and unusually high sales numbers in March.

Combined private and commercial vehicle sales dropped from 67,314 to 45,187 during the space of a month, following the introduction of the Goods and Services Tax.

The MAA said it expects sales to recover “slightly” in May as consumers start adopting a “cautiously optimistic” outlook.

Malay Mail Online previously reported that consumers had binged on “big ticket” items such as cars and household appliances ahead of the GST over concerns that such purchases would become dearer once the new tax was introduced.

The opacity surrounding the effect of the GST on the retail pricing of vehicles was also reflective of the general confusion that has weighed on the rollout of the new consumption tax, which was characterised by open disputes between businesses and the government.

This was further compounded by falling consumer confidence in the country, with one AC Nielsen study showing that Malaysians perceive the country to be “in recession”.

Only a third of Malaysians in the survey said they intended to make major purchases at the moment, with the majority preferring to put their savings aside for later use. - Malay mail