Will CKD car prices rise in 2023 or not?

The question of rising car prices is always a hot topic in Malaysia.

 Some of you might have heard about the possible rise in local assembled car prices next year, 2023. As we already know, the cost of imported goods is already rising slowly in Malaysia and recently we saw a rise in price for new tyres, car batteries and even car spare parts. Rising logistic and shipping costs and our falling Malaysian currency against the US dollar are part of the issue and the war in Ukraine is not helping the situation either.

 For locally assembled vehicles (CKD) the shipping costs of parts from the country of origin and the currency value will definitely add to its final selling price and even right now most car manufacturers in Malaysia are absorbing the slightly higher costs and showrooms are no longer offering any discounts or special deals for buyers. 

Add to the fact, the manufacturing parts shortages and also computer chip shortages are causing a backlog in the supply chain and ultimately a shortage of many models in various showrooms, there is little reason for car salespeople to offer discounts or ‘free gifts’ to car buyers right now. 

The only life-line for a lower price is the current SST (sales tax) discount which removes the 10 percent sales tax on locally assembled vehicles from Proton and Perodua right up to BMW and Mercedes-Benz. 

 The buyers of fully imported cars are not forgotten as they get half of the above-mentioned discount and this helps to bring the price of premium cars from Porsche to Lamborghini down by double digit figures. So its good news for the wealthy Malaysian car buyer as well.

Now for the main discussion point. Why there will be a rise in locally assembled vehicles in 2023 beyond all the above reasons we have just shared. Well, the Malaysian tax department is revising the calculation based on a new format ‘open market value’ excise duty calculation. 

This new calculation method will push the prices of locally assembled vehicles by 8 to a high 20 percent and all this additional money will be going to the Ministry of Finance who has been generous with Malaysian car buyers in the past 18 months with the SST discount. Take note that this will probably happen ONLY after the coming General Election (If before, then the ruling government will not have a chance of winning).

It is time for car buyers to quickly try and get their new car before this comes into force as it could also push up the value of some vehicles in our used car market. With rising new car prices, vehicles between the age of 5 to 10 years will also move up slightly in value as some new car buyers turn to used cars as their budgets cannot be extended for a new car. Why do we say 5 to 10-year-old cars? Well, this is the segment where car financing is still available and allows many to easily take ownership.

Also read: Should the SST discount holiday be extended in 2022 or not?