PETALING JAYA: Total vehicle sales rose 13% year-on-year to 57,552 units last month, compared with 50,854 units in the previous corresponding period as the government’s tax exemptions and aggressive promotional campaigns by automotive companies continued to spur car sales.
The Malaysian Automotive Association (MAA) said the stronger sales last month was also due to the fact that it was a longer working month compared with June, whereby sales in July were 29% higher on a month-on-month basis.
However, year-to-date July, total vehicle sales stood at 232,245 units compared with 347,171 units in the corresponding period, due to businesses being forced to shut down for nearly two months during the movement control order (MCO).
An analyst with a local bank-backed brokerage said sales in July were within expectations.
“The rise in vehicle sales can be attributed to the tax holiday, whereby customers are eager to capitalise on cheaper vehicle prices, ” he said.
Under the Short-Term Economic Recovery Plan (Penjana) announced by Prime Minister Tan Sri Muhyiddin Yassin last month, locally-assembled cars will be fully exempted from sales tax, while for imported cars, the sales tax will be cut from 10% to 5%, until Dec 31.As for August, MAA expects the level of vehicle sales to be on par with July’s.
The association said the projection is underpinned by the sales tax exemption and ongoing promotional campaigns by car companies.
In a recent report, CGS-CIMB said there are positive signs of recovery in the second half of 2020, adding however that key challenges still remain.
“While the MAA is appreciative of the government’s decision to waive sales taxes until end-2020, it is wary that with the current economic situation, consumers are more cautious on spending on big ticket items like motor vehicles.
“Hence, second half total industry volume (TIV) may not be as exciting as the previous tax holiday period in 2018. In spite of the lower interest-rate environment, stricter lending approvals from financial institutions remain a key challenge for the sector.”
TIV in the first half of 2020 plunged 41.1% to 174,675 units from 296,317 units in the previous corresponding period as a result of economic disruptions resulting from the country’s MCO to curb the spread of the Covid-19 pandemic.
Last month, the MAA announced that it was revising upwards its vehicle sales target for the year by 17.5% to 470,000 units, as the grim economic outlook is likely to be buffered by the various incentives recently announced by the government.
Nevertheless, the projection would not only mean that sales this year would be a 22% contraction from 2019’s 604,287 units sold. It would also be the first time in 13 years since TIV failed to surpass the 500,000-unit mark.
In April, the MAA revised downwards its 2020 TIV forecast to 400,000 units from the 607,000 units it had projected in January.
