Automotive sector to see buoyant recovery in car sales

Additionally, Battery Electric Vehicles (BEVs) new launches are expected to be boosted by the full exemption on import and excise duties, sales tax, road tax, and individual tax relief of up to RM2,500 for the costs of purchase and installation as well as rental and subscription fees of EV charging facilities up to December 31, 2025 (for CKD and CBU up to 2023) to support development of the local EV industry.

Kenanga Research

KUCHING: With the reopening of economic activities, and further driven by the 100 per cent sales tax exemption on completely knocked down (CKD) passenger vehicles and 50 per cent similar exemption on completely built up (CBU) including sports utility vehicles (SUVs) and multipurpose vehicles (MPVs) for six months until end-Jun 2022, analysts expect buoyant recovery in car sales.

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), this is evident from the growing number of backlogged bookings for popular models (up to six months) and stream of new models launches in 2022 (including models launches that were postponed from 2021).

“Additionally, Battery Electric Vehicles (BEVs) new launches are expected to be boosted by the full exemption on import and excise duties, sales tax, road tax, and individual tax relief of up to RM2,500 for the costs of purchase and installation as well as rental and subscription fees of EV charging facilities up to December 31, 2025 (for CKD and CBU up to 2023) to support development of the local EV industry,” Kenanga Research said.

“Nevertheless, for certain models, the recovery of car production could be limited by the on-going global constraint in semiconductor chips supply.

“Automakers have prioritised usage of such resources, diverting any precious semiconductors they have to their most profitable vehicles such as full-size trucks and SUVs, as well as luxury vehicles.”

Kenanga Research gathered that the Malaysian Automotive Association (MAA) is currently vying for further SST exemption extension to end-2022 as the current chip shortages are limiting automakers’ ability to maximise production capacity to meet back-logged demand which stretched up to six months for certain models.

To note, the research arm’s 2022 total industry volume (TIV) target at 600,000 units (up 18 per cent) is in line with MAA’s 2022 TIV target.