SST - Defying Prediction

Contrary to earlier simulation, the re-introduction of SST has made the OTR price of most cars lower than the previous price with GST of 6 percent. Many OEMs were ready to announce the new prices just before the Independence Day Holiday but were told to review and recalculate them, hence the delay of the announcement to 3^rd September, and hence the reduction in the prices. Using the earlier formula, majority of the brands would have been announcing the price hikes.

Prices for Honda models were among the first to go viral, indicating a reduction ranging from RM800 to RM4,800, reflecting a drop ranging from 0.5 percent to 3.1 percent from the OTR prices under the GST regime. Proton and Volkswagen Passenger Cars Malaysia (VPCM) have also released their latest prices. Other brands are expected to release their prices in a day or so as they are still seeking for clarifications from Customs over SST's formula.

According to Datuk Aishah Ahmad, the MAA President, the OTR prices for CKD units will be lower under SST compared to the GST, while the CBU would be higher. The difference is basically due to the inclusion of the Industrial Linkage Programme (ILP) in the calculation of the prices under the SST regime. Meaning, those models with higher local components will enjoy higher reduction in prices, vis-a-vis the value. There were also brands that applied Price Protection Plan to reduce their CBUs to stay competitive under this new pricing environment. 

With the new prices announced, market condition is expected to be better than what was projected earlier. General estimation (earlier on) was that the re-introduction of SST will see an increase in the OTR price of cars. Nonetheless, the public will need some adjustment period to digest the new prices. This, couple with the high advanced purchase made during the last three months will probably dampen the market momentum in September to some degrees.

On the other hand, with huge outstanding booking currently enjoyed by most OEMs, and with the commitment to honour the zero-rated GST saving to their customers, the industry will continue to see the spill over of registration and higher volume in September, though not as high as what have been seen in the month of June, July and August. The TIV for September will probably be lingering around 50,000 to 55,000 units before slipping to below 50,000 level in the following two months.

Perodua has publicly announced its new prices on 3^rd September, seeing a reduction in the prices of its 3 models; the Myvi, Axia and Bezza, by 1 to 3 percent from the previous GST 6 percent prices. 

For the Alza, two of its high end variants also sees some reduction in prices. However, the Alza standard variant's price is now slightly higher than the previous GST price, attributed to higher standard accessories added to the variant during the recent "cosmetic change". Under the new SST regime, standard accessory is now a taxable item.

For me, Malaysians should have no reason not to be happy with new prices. Despite the migration to 10 percent in  SST from a 6 percent GST , the OTR prices are now much lower. Majority of popular brands are becoming more affordable with a reduction of up to 4 percent. It is a good news after all.