The government announced a sales tax exemption for 6-month period until December 31,2020. How does this help the industry and should you buy one?

Recently, our government announced a National Economic Recovery Plan (PENJANA). This plan is intended to help encourage the Malaysian economy as the pandemic’s effects subside in Malaysia and increase the buying power of the rakyat.

One of the incentives mentioned by Prime Minister Tan Sri Muhyiddin Yassin is the waiving of the sales tax on all locally-assembled vehicles for a six month period to help the automotive sector to recover better from the Covid-19 crisis.

“The government has agreed to exempt sales tax up to 100 per cent for completely-knocked down (CKD) passenger vehicles and 50% on completely built up (CBU) cars from June 15, 2020 to December 31, 2020,” – Muhyiddin Yassin, Prime Minister of Malaysia.

Car companies that have announced their sales tax revision

  • Perusahaan Otomobil Kedua Sendirian Bhd (Perodua) offers cash rebates between 3% and 6% on their vehicle prices from June 5 until June 14. They will also incorporate new prices from today to December 31 as announced by our prime minister.
  • UMW Toyota also released its revised price list that is valid from today until December 31. According to Paultan.org, an automotive portal, savings from ­the sales tax exemption can be observed on the company’s entire passenger car range. Only the price of the Innova taxi-spec variant and Hilux range of pick-ups remain the same.
  • Bermaz Motor, the official dealer for Mazda model announced their new prices effective from June 13 until December 31 with reduced prices of the entire Mazda line-up in Malaysia. For example, you can save RM2,800 (2.7%) compared to previous prices.

The benefits for consumers

CEO of Robotics & IoT Institute, Madani Sahari told FMT  that the incentive would encourage consumers to weigh in their decision to buy a car instead of prolonging it.

“It is important that the industry maintains sales with a minimum of 500,000 units this year to remain sustainable in the long run,” said him.

But, he also advised buyers to make a decision based on the affordability and to include used cars as one of their options. Buyers must consider other cost they have to bear such as fuel consumption, wear and tear, safety and maintenance.

Malaysian Automotive Association (MAA) president, Datuk Aishah Ahmad told NST that