May 2018 - Gomoku

Traditionally, May has always been a good month for car sales. On  the average, the TIV will grow around 16 percent from April. Similarly, high hope was put by many OEMs for this year’s May, as it supposed to mark the beginning of festive sales, with Raya, Gawai and Kaamatan are all around the corner. Unfortunately, it was not the case this year as TIV for the month of May failed to even break 43,000 units.

May came and went with multiple challenges that really tested the automotive sales in Malaysia. The 14^th General Election was held on 9^th May, which divert the attention and focus of the public towards the election. The pre-announced holiday on the 9^th in conjunction with the polling day, and followed with 2 days unplanned holiday on the 10^th and 11^th, which followed by weekend directly reduced the number of working and business day by 5 days.

The early announcement of “Zero Rated GST” effective 1^st June 2018 on 17^th of May totally collapsed the market as almost everybody holding the purchase to enjoy zero GST 14 days later. Despite some OEMs scrambled to announce the counter-measure, the market has lost many days and was not able to recover until the end.

Those unexpected conditions contributed to a lower TIV for the month of May, which ended up with only 42,320 units (pending official figure from MAA), 4,769 units short from April and 8,280 units lower compared to the same period in 2017, Hopefully with tax holiday ongoing and raya mood is getting stronger, things will change for the better in June.

On the contrary, Perodua recorded the highest May sales this year, 3^rd highest since inception with 21,980 units registered. With lower TIV, this gave Perodua a whopping 51.9 percent share in the month of May, the highest ever. The move to offer GST rebate finally worked to bring back customers.

It was not an easy task though. Up to 17^th May, Perodua only managed to register 4,700 units with only 110 units registered over a span of 5 days from 9^th to 15^th May. On 18^th May, Perodua reverted its May Sales Campaign and superseded it with the GST rebate. A painful decision but something that has to be done nonetheless.

As they say it, GOMOKU, with 5 months in a row above 40 percent share.

For me, again, I must say, Peroduans have done well even in difficult situation. All, the front-liners, the support groups and the backroom guys emerged as the true winner. You are all the “unsung heroes”. And to Malaysians, I will never exhaust of saying THANK YOU for your endless support to Perodua

Tax Holiday

SST will be introduced in September, announced YAB Prime Minister during post second cabinet meeting on 30^th May 2018. Well, that answered one question, namely on when will the holiday end? How much?  This is the other part of the equation that is still pending.

Today marks the beginning of a 3 months break on tax, where we will see the car prices to be reduced by 6 percent. In-terms of Ringgit Malaysia, the higher the OTR price is, the bigger the reduction amount will be. For example, Porsche Panamera Turbo previously priced at RM1,550,000, now retailed at RM1,462,244 or RM87,736 cheaper. Examples on medium range of cars are Hyundai Elantra 2.0 Executive, which previously sold with 6 percent GST at RM 116,388 is now priced at only RM109,888.  Toyota Altis 1.8G is now retailed at RM113,526 or RM6,744 cheaper. Honda City 1.5V is now RM5,033 cheaper than before.

On a more affordable segment, the reduction amount is smaller. For example, Honda Jazz 1.5S is now priced at RM68,422, a RM4,088 cheaper than the OTR price with 6 percent GST. The Proton Saga 1.3 CVT is now at RM39,480.43 compared to RM44,072.25 before. Toyota Avanza 1.5G A/T is RM4,467 cheaper at RM74,733.

Assuming the SST is at 10 percent, then the OTR price will increase again, not to the level of the OTR  price with GST, but much higher. For example, when the GST was introduced in April 2015, prices of Subaru models were reduced by almost RM12,000 and Nissan cars were down by RM2,700.  The introduction of SST will likely hike the prices to the same level of those before April 2015 again.

In whatever cases, the car prices in Malaysia will be at their lowest level from June to end August 2018. This is purely based on declared OTR. But of course, OEMs may introduce their own Sales Campaign such as discount or rebate to subsidize the increase or as part of their normal way to support sales, which will be the net price to be paid by customers, that may differ from the declared prices. If assuming again, the support is higher than the hike as a result of SST re-introduction, the final price to be paid by customers may be even cheaper. Who knows.

During this Tax Holiday period, OEMs with sufficient stocks will benefit the most as it is expected that there will be an influx of purchase from the public. The sales must be done and completed within these 3 months’ period.

The surge is also expected to bring up the TIV again. The first 5 months of 2018 has not been favourable and far from meeting the 2018's projection volume of 690,000 units. As we speak, the TIV up to end of May was forecasted to be around 224,726 units, or 4 percent lower compared to the same period last year.

Prices for Perodua range of products are also lowered accordingly.

For me, this is a one time opportunity we should not be missing. Malaysians wished for reform and GST abolishment is one of the changes being echoed. The rare Tax Holiday is for real now. Enjoy it while it last.