PETALING JAYA: Total vehicle sales rose 53% year-on-year to 67,659 units last month, as car companies continued to fulfil bookings received prior to the expiry of the vehicle sales tax exemption on June 30, 2022.
The jump in performance was also due to less-than-ideal economic conditions last year, where businesses were just starting to recover from the Covid-19-related lockdowns, said an analyst.
“With better economic conditions, car sales for September came in within expectations,” he said.
According to data released by the Malaysian Automotive Association (MAA) yesterday, a total of 60,060 passenger cars and 7,599 commercial vehicles were sold last month.
According to a recent report by Kenanga Research, vehicle order backlogs are reaching some 400,000 units, comprising mostly vehicles of newer models that are currently out of stock.
“Not all of these, particularly new models with a waiting period of beyond 12 months (such as the Perodua Alza), will be delivered and registered before end-March 2023 to enjoy the sales and service tax exemption, despite the bookings being made prior to end-June 2022.”
Kenanga Research said this would mean total industry volume (TIV) will “not fall off the cliff” after March 2023.
“Additionally, there will be launches of new battery electric vehicles (EV) that will still enjoy the sales tax exemption and other EV facilities incentives up to 2023 for completely-built-up and 2025 for completely-knocked-down, underpinning the TIV.”
Meanwhile, MIDF Research said car companies are sitting on an implied seven-to-12 months waiting list.
“The strong order bank provides good revenue visibility for the sector moving into 2023.
“Furthermore, new bookings post the tax holiday have been holding up pretty well, with an average 20% to 30% reduction versus average monthly bookings during the tax holiday.”
MIDF Research noted that new bookings from July would likely feed into TIV from April 2023, further cementing revenue visibility from strong forward bookings.”
According to the MAA, year-to-date September vehicle sales rose more than 60% to 516,798 units from 318,827 units in the previous corresponding period.
For October, MAA said sales are expected to be maintained at last month’s level.
“Supply and chips problems are still ongoing and affecting some marques,” it said.
Meanwhile, Kenanga Research said it is unperturbed by the impact of rising interest rates on vehicle sales.
“Assuming Bank Negara is to raise the overnight policy rate (OPR) by another 25 basis points to 2.75% in November, taking the total OPR hike for 2022 to a full percentage point (from 1.75% to 2.75%), this will only raise the monthly instalment for, say, a Perodua Myvi (priced at RM60,000, with 90% financing margin and five-year tenure) by 4.6% from RM978 to RM1,023.
“We also note that the actual interest rates charged varies based on term, financiers, car models, individuals credit score and newer popular models are most likely to be charged a lower effective interest rate range.”
While the chip shortage for many carmakers has started to ease, RHB Investment Bank noted that many are still short on various components.
“The ongoing and potentially worsening energy crisis in Europe could further exacerbate the component shortage, as European producers of various components, from glass to aluminium, face the risk of factory shutdowns.
“However, should this materialise, we believe there will be a minimal impact on the companies we cover, since domestic/Asia-Pacific production tends to source components regionally.”
RHB also noted that orders are gradually recovering month-on-month and should continue to do so, as consumers adapt to prices post the sales tax holiday.
The vehicle sales tax exemption was announced in June 2020, under the short-term economic recovery plan or Penjana.
Under the exemption, locally-assembled cars are fully exempted from the sales tax while for imported cars, the sales tax was reduced from 10% to 5%.
The tax holiday was supposed to end in December 2020 but was extended to June 30, 2021, and again until the end of that year.
During the tabling of Budget 2022 in October last year, the government had announced that the sales tax exemption would be extended one more time until June 30, 2022.
The multiple extensions were mainly due to the repeated lockdowns over the past two years, which disrupted business operations and prevented car buyers from being able to enjoy the benefits of the tax holiday.
However, buyers who had booked their vehicles during the tax holiday period have until March 31, 2023 to register their vehicles with the Road Transport Department.
At its biannual meeting in July, the MAA forecast new vehicle sales to grow 5% to 630,000 units for 2022.
