New car prices are expected to be cheaper after the implementation of GST according to Malaysia Automotive Institute (MAI). Currently new cars are subjected to 10% sales and service tax but this will be replaced with GST which is 6%. This may indirectly reduce new car prices with lower sales tax however it will be very hard to assume cars will be 4% cheaper after GST implementation.
According to Bernama, MAI CEO Madani Sahari predicted that new cars will be on average 1% to 3% cheaper after the implementation of GST. This includes most models including imported cars. This will indirectly set to encourage demands for vehicles.
The same situation cannot be compared with pre owned or used cars. Kuala Lumpur and Selangor Car Dealers and Credit Association Companies Khoo Kah Jin reiterated that GST will have a bad effect on used car industry in Malaysia. At the moment used cars are not subjected to Sales and Service Tax (SST) and is not a GST zero rated item. Therefore predictably, used car will be subjected to an extra 6% after the implementation of GST on early April 2015.
According to research, consumers have now adopted the wait and see approach as the GST will be implemented. MAA has predicted that sales of vehicle will reach new volume at 2.2% growth at 670,000 units this year.