The SST exemption aka ‘tax holiday’ will end after 30 June 2022, which means that those who want to take advantage of this will most likely place their booking for a new car before the month ends. Will that be an issue in the coming months?
As announced by the Ministry of Finance, those who wish to benefit from the tax break can do so by finalising their bookings by 30 June 2022. It was also mentioned that they have until 31 March 2023 to register their new vehicles with the Road Transport Department (JPJ) as part of the SST exemption grace period.
Book first, think later?
Looking at these two factors, Maybank Investment Bank Bhd (Maybank IB) consulted its almighty fortune teller machine where it foresees some ‘unnecessary issues’ within the automotive sector in the next nine months. Why? There will be cases where many bookings will be made by June end, but the option to cancel is also there without any major repercussions. No harm, no foul for the customers.
These ‘speculative bookings’ will see a sharp rise over the last few days of June and combined with the 264,000 units booked earlier, all parties related to the matter will be affected. We’re talking manufacturers and parts supply chains right down to the dealers and sales team, even customers who are in dire need of a new vehicle.
In other words, booking numbers and projections will most likely get distorted because customers who have placed their bookings can simply cancel or transfer their deposits at any given time before the cars are to be registered. This will also affect the booking rates for the remainder of 2022 as they foresee a sharp rise in June, but a great fall starting July onwards.
Request to only register in 2023 also problematic?
Then there’s the possibility of customers requesting for their cars to be registered and delivered only in 2023, further messing with the 2022 new car sales projection forecasted between 580,000 to 600,000 units. New car registrations in the second half of 2022 might be weaker than expected, but Q1 2023 will see a boost in figures.
We can already imagine some folks will react by saying something like “Saya punya duit, saya punya hal la nak beli kereta ke tak! To cancel or not, not a problem for me also.”