MAA expects targeted diesel subsidy to have insignificant impact on vehicle sales

KUALA LUMPUR: The impact of the government’s targeted diesel subsidy programme on the total industry volume (TIV) of vehicle sales is expected to be insignificant, according to the Malaysian Automotive Association (MAA).

In a statement today, the association said this expectation is based on the fact that diesel vehicles constitute less than 12 per cent of the total vehicles nationwide, and the government is providing targeted subsidies to eligible recipients and sectors.

It noted that the government continues to provide subsidies to the bottom 40 per cent (B40) income group, eligible commercial vehicles and diesel vehicle users in Sabah and Sarawak.

"With this implementation, we hope that the government can continue to give incentives or energy subsidies to the latest technology such as hybrid electric vehicles, battery electric vehicles, and fuel cell electric vehicles,” it said.

However, MAA recognised that since the approved subsidies do not cover all eligible sectors, it is crucial to have an accurate and efficient rebate mechanism.

"It is important that the subsidy quota for these sectors are clearly defined to prevent transport operators from raising transport rates that will affect the public and national competitiveness,” it said.

On another note, the MAA predicts that this year’s TIV will remain at the forecasted level as demand for commercial diesel vehicles, pickup trucks and vans remains high.

However, the association opined that while consumers will initially be cautious, they will not avoid purchasing diesel vehicles as these are needed.

In Malaysia, most vehicles that use diesel engines are pickup trucks, vans and commercial vehicles.

Besides private use, these vehicles are primarily used in the construction, plantation, logistics, tourism, and transportation sectors, which are crucial for business operations.

On June 10, the Ministry of Finance fixed the retail price of diesel in Peninsular Malaysia at RM3.35 per litre, while Sabah, Sarawak and Labuan remained at RM2.15 per litre from June 13 to 19, 2024.