USED car dealers want the government to remove the vehicle sales tax exemption set to end on June 30, as the country continues to recover from the Covid-19 pandemic.

Dealers instead want the sales and service tax (SST) to be extended in line with the announcement that the registration of new vehicles with the Road Transport Department has been given an extension until March 31, 2023.

Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) president Tony Khor said the exception on vehicle sales tax should be extended to next year because the cost of living has risen together with the prices of goods and food.

“The people are worried about the economy and prices of chicken, fish, cooking oil and others that are going to or have increased. Everyone is suffering.

“People need transport and they are looking for used cars rather than buying new,” he told The Malaysian Insight.

Khor said even though the government is losing out on the sales tax they are getting funds from other revenues, such as the import and excise duties for vehicles.

On Monday, Finance Minister Tengku Zafrul Abdul Aziz said vehicle sales tax exemption will expire on June 30 as planned, but buyers who order their vehicles before June 30 will be exempted and will have until March 31, 2023, to register their vehicles with the RTD, he said.

“The extension to register new vehicles is a midpoint solution to balance the government’s income and consumer interests,” Tengku Zafrul said.

To date, a total of 868,422 units of vehicles have been sold with a sales tax exemption of RM4.7 billion.

Khor said the exemption is crucial for people to survive as it is a necessity not a luxury.

“Everyone needs a vehicle, be it for travelling to work, doing business or others, transport is very important.

“The government should allow everyone to own a vehicle.

“We appeal to the minister to reconsider the condition that customers will have to purchase the vehicles before June 30.”

Used car sales

He said from January to June this year, the FMCCAM estimated more than 200,000 used cars have been sold.

“We can see that there is a 10% increase in sales compared to last year when the industry was not doing so well.

“Now, we are slowly recovering. It will take more than a year to get back up to what it was before (pre-pandemic levels).”

Khor said there is a possibility that used car sales will increase as the country grapples with the high cost of living.

“As prices keep increasing (goods and food) we foresee that people will move toward used cars.

“This year we expect to sell more than 400,000 units. This is a conservative forecast. We also have to consider our supply of used cars.

“There could be a shortage as the delivery of new cars is slow causing buyers to keep using their existing cars. More than 60% of customers trade in their vehicles.”

He said nationwide they fluctuate between 80,000 and 120,000 units in their inventory.

Khor said the association currently has 4,700 members, which include new and used car dealers, and credit companies that provide hire purchase agreements. – June 24, 2022.