New car sales to post 6.9pc increase this year, says Fitch Solutions
KUALA LUMPUR: Malaysia’s new vehicle sales should weather the impact of the Movement Control Orders 2.0 (MCO 2.0) amid extension of the sales tax exemption to June, said Fitch Solutions.
The research firm has maintained its forecast of a 6.9 per cent increase in total new vehicle sales for this year following the estimated 15 per cent decline last year.
“This will result in this year’s sales remaining below the preCovid-19 pandemic level, reaching just under 550,000 units,” it said in a report yesterday.
It also expects the Covid-19 vaccine rollout to support its view as sentiment among consumers improves, which will lead to a resumption in vehicle purchases.
Under the government’s sales tax exemption introduced in July last year, complete knockeddown (CKD) vehicles are granted a 100 per cent sales tax reduction while complete built-up (CBU) vehicles are eligible for a 50 per cent reduction. This had led to a 28.8 per cent month-on-month increase in car sales.
By comparison, vehicle sales had declined by 99.4 per cent month-on-month to 141 units in April last year following the introduction of the first MCO.
Fitch Solutions said when the sales tax exemption was first introduced in June 2018, vehicle sales also increased 50.1 per cent on a month-on-month basis.
“We expect sales this year to
follow a similar path as that observed in the months after the gradual easing of movement restrictions in May last year.
“In addition, the Customs Department has delayed the introduction
of excise duties on CBU and CKD vehicles. We believe these developments will create a conducive environment for vehicle sales growth this year,” it added.