CAR sales doubled to 44,000 in June from the previous month despite only small discounts offered following a sales tax exemption, said trade groups.

The Perikatan Nasional government announced a reduction of 50% to 100% in the tax for vehicle purchases as part of its Penjana economic stimulus package, to aid an automotive industry hit hard by the Covid-19 pandemic.

The exemption amounts to 50% for imported passenger cars and 100% for locally assembled cars that are bought between June 15 and December 31.

Malaysian Automotive Association president Aishah Ahmad said this led to the price of vehicles declining only between 2% and 6%.

“The higher the car price, the bigger the price reduction.

“But the association is grateful for the incentive, which does help the industry. It has helped bring people back into the showrooms.”

She said the incentive pushed up sales to 44,000 units in June from the 22,000 in May.

A car salesman, who wanted to be known only as Ahmad, said the exemption does not amount to much in the end as it does not apply to import and excise duties, which contribute to the sale price.

For instance, he said, the price drop for a Proton Iriz 1.3 executive that retails for RM46,185.12 is only RM600.

“For cars that are below RM50,000, there is not much of a price discount.”

The value of the discounts is roughly the same as those seen during the “tax holiday” period from June to August in 2018, when the then Pakatan Harapan government zero-rated the goods and services tax before making the switch to the sales and services tax in September, he said.

Malay Car Importers and Sellers’ Association president Zainuddin Abd Rahman said it is asking the government for a 50% reduction in all taxes and duties to boost sales.

“The sales tax exemption does not significantly bring down prices,” he said, adding that it translates into discounts of RM1,600 to RM6,000 for imported vehicles.

He said the imported car market will continue to be sluggish even though people are starting to show an interest in buying again.

“People are starting to buy cars again, but it will continue to be hard for imports because they are priced between RM150,000 and RM1 million.

“Banks are also becoming stricter with car loans and demanding heftier deposits, so it is harder for us.” – August 9, 2020.