Car prices to drop 1%-3% next year with GST

by **Cals** Thu 11 Sep 2014, 08:27

Business & Markets 2014

Written by Meena Lakshana of theedgemalaysia.com

Wednesday, 10 September 2014 13:01

KUALA LUMPUR (Sept 10): Car prices are expected to come under pressure from the implementation of the Goods and Services Tax (GST) in April next year, dropping between 1% and 3% in 2014.

Malaysian Automotive Institute (MAI) chief executive officer Madani Sahari said although the proposed GST rate of 6% is lower than the current Sales and Services Tax (SST) at 10%, the anticipated car price drop will also depend on the value determined by the original equipment engineers (OEMs).

"The government does not control car prices and we shouldn't because it (automotive market) is a free market," he told a press conference after the opening of the 2014 Altair Technology Conference here today.

"Based on our simulation studies, we see a decrease in car prices of between 1% and 3% next year after the GST implementation,” he said.

Madani, however, urged car buyers not to refrain from purchasing cars this year.
“That’s because as cars depreciate in value at 10% every year, the difference in value of second-hand vehicles this year and next, compared with purchasing new vehicles next year will be incremental.

"Let's say your second-hand vehicle is valued at RM50,000 this year, next year it will be valued at RM45,000," he said.

"But the decrease in car prices next year is only 1% to 3% [and] so, you will be better off selling your cars and buying new ones this year," he reasoned.