Prices of imported CBU cars to stay

Govt delays implementing new formula on duties until Dec 31

PETALING JAYA: Prices of imported completely-built-up (CBU) vehicles will remain the same this year, as the government has postponed implementing a new formula on duties for CBU cars until Dec 31, 2020.

Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said the move would provide a much needed reprieve to the Malaysian automotive sector, which has been gravely affected by the Covid-19 pandemic.

“We are very grateful to the Finance Ministry as this will really help the industry,” she told Starbiz.

The revised formula on CBU vehicles was initially supposed to be implemented from June 1.

Under the new formula, prices would be determined by the exchange rate of the day the shipment of the vehicle arrives, with customs determining the calculation of CBU prices.

Normally, it is the principals that will adjust the CBU prices.

In January, Aishah announced that the government would postpone implementing a new formula on duties for completely-knocked-down (CKD) vehicles until next year.

“We are thankful for the government’s decision to postpone implementing the new formula on duties for both CBU and CKD cars until year-end. The local automotive sector is facing one of its most difficult periods in history and we are grateful to the government for being truly understanding of the industry’s needs,” she said.

The government imposed the movement control order (MCO) on March 18 to tackle the rising number of Covid-19 infections. The MCO, which was initially supposed to last two weeks, has been extended to May 12.

The MCO has had an adverse impact on businesses nationwide, including the automotive sector. As a result, the MAA announced last week that it was revising downwards its 2020 total industry volume (TIV) forecast to 400,000 units from 607,000 previously.

The 400,000 units forecast would represent a 34% contraction from 2019’s 604,287 units. It also marks the first time in 13 years since the TIV failed to surpass the 500,000-unit mark.

According to historical data, the last time vehicle sales failed to breach the 500,000-unit mark was in 2007, when TIV stood at around 480,000 units.

Year-to-date March 2020, sales fell 26% to 106,428 units from 143,036 units in the previous corresponding period.

Various research houses have also revised their TIV forecast for 2020. Kenanga Research in a report earlier this week said it expected TIV to shrink more than 30% this year.

“This is only to be expected, given that showrooms are closed during the MCO and consumers are cautious on spending on high-value discretionary items such as vehicles, imported goods and overseas travels.

“Furthermore, the planned new launches for the second half of 2020 could be delayed, given the weak consumer sentiment but some relief could arise from better incentives under the National Automotive Policy and positive impact from Bank Negara’s cut in the overnight policy rate, as well as pre-emptive measures to assist those who might be financially challenged by the Covid-19 crisis.”

The research house said the MCO would adversely impact the economy in the short term, adding that the economy is expected to contract by 1.9% this year.

“Going forward, the final impact would depend on the outcome of containment measures and whether the movement restriction order would be extended.”

MIDF Research, in a recent report, meanwhile said it is expecting a 16.5% year-onyear contraction in TIV to 505,000 units, adding that a recovery post-mco is likely to be pushed out, given the implication on job security, wage outlook and consumer sentiment.

“Consumers would have likely shifted into ‘survival mode’ now with little priority for discretionary spend,” it said.

Many car companies have already partially commenced operations. Moving forward, automotive firms will need to rethink and re-strategise their business operations in light of the Covid-19 crisis.

Last month, Starbiz reported that the ongoing Covid-19 pandemic is forcing local automotive firms to revise their marketing standard-operating procedures, with some either postponing their new model launches or resorting to unique methods to push sales and remain sustainable during this challenging environment.

Among the companies that have reportedly delayed the introduction of new models are Subaru and Honda, which have postponed the launch of the new Subaru Forestor GT and Honda BR-V facelift, respectively.

Some car companies have also announced plans of finding ways to launch their cars via social media platforms.