Penjana tax exemption revved up 2020 car sales

 

The finance ministry announced the extension of the vehicle sales tax exemption period by a further six months until June 30.

PETALING JAYA: Vehicle sales for 2020 were better than expected due to the sales tax exemption provided under the Penjana economic stimulus package, the Malaysian Automotive Association (MAA) said.

Despite a dip of 12.4% in year-on-year sales, MAA president Aishah Ahmad said the total industry volume (TIV) for 2020 would have declined further without this incentive.

The TIV registered in 2020 was 529,434 units, a decrease of 74,847 units compared with 604,281 units sold in 2019.

She said MAA was optimistic that the local automotive market will rebound in 2021, despite the movement control order.

It expects the 2021 TIV to rise to 570,000 units.

“Despite a double-digit drop in TIV, it was nonetheless a good achievement for the local automotive industry given the extremely challenging business environment. It was higher than MAA’s forecast of 470,000 units,” she said of last year’s figures.

“The better-than-expected performance of the automotive industry in 2020 can be attributed mainly to the sales tax exemption incentive for passenger vehicles under the Penjana package,” she told a virtual press conference today.

Last year, Prime Minister Muhyiddin Yassin announced sales tax exemptions on locally assembled cars (100%) and imported cars (50%) from June 15 to Dec 31 to help the automotive sector.

Aisyah said the vehicle sales tax exemption announced by the government had boosted demand and driven sales in the second half of the year.

“The total sales in the last three months of 2020 saw a sterling increase to 184,121 units compared with 161,296 units achieved in the third quarter of 2019.

“The monthly TIV reached its peak in December 2020 when a total of 68,836 units were registered.

“The exceptionally high TIV in December was due to consumers buying forward in anticipation that the sales tax exemption incentive for passenger vehicles under the Penjana package would end on Dec 31, 2020,” she said.

However, on Dec 29, 2020, the finance ministry announced the extension of the vehicle sales tax exemption period by a further six months until June 30.

Aisyah said MAA expected sales to continue rising because the automotive industry has been included as one of the essential services allowed to operate during the latest MCO.

“During the previous MCO, the government had restricted our operations. This resulted in the industry losing more than two months in vehicle production in 2020,” she said. - FMT