GST coming back to Malaysia and how will car prices move

Selling car prices in Malaysia will be moving upwards because of the GST and more.

This cannot be avoided and even though there will be some anger and disappointment coming from the middle class to the lower middle-class segment in Malaysia, it must be noted that the real impact of the Goods and Services Tax (GST) collection will come from the upper middle-class Malaysians.  

The super rich will not be ‘dented’ by the inclusion of GST and the very poor in Malaysia have no money to buy even the cheapest new car on sale, the Perodua Axia base model.

 GST will be a percentage added on to all new purchases and big ticket items like new vehicles will be a big part of GST collection for the Malaysian tax department.

 Until recently, most car manufacturers and assemblers in Malaysia have been absorbing the rising cost of logistics, materials and also the negative effect of the Malaysian currency exchange against the US dollar which is the primary currency for vehicle and parts purchasing. 

This is why new car buyers in the last 12 months or so have not been accorded any discount or fancy-free gifts to entice new car buyers to place a booking.

With a global shortage of vehicles, all makes and nearly most models from all car showrooms in Malaysia are seeing much lower new stocks coming in and waiting lists are growing for popular brands, some as long as 12 months. This is why there are no discounts offered like in previous years before Covid-19, no pre-registered cars (which is common with BMW and MINI vehicles) and no free expensive window tinting and car paint protection (which is common for Proton and Toyota dealers).

Car salespeople are instead becoming just order takers and their effort is lower as they can’t earn their sales commissions until the new car is delivered to the waiting customers.

So, with the inclusion of GST, the absorption of this small percentage of added cost by new car dealers and their principals will NOT happen for the next year or so as new car prices could move up by 2 to 5 percent depending on which direction the Malaysian tax department needs to go.  

We are quite sure that new car prices will rise by 5 to 8 percent in the coming year because of GST, cost of raw materials and also shipping costs. No choice, it is going to happen. 

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