GST Part II

Despite the announcement by both, the Prime Minister Tun Mahathir and newly appointed Finance Minster YB Lim Guan Eng that the GST will be replaced back with SST, there is still no conclusive timing when it will happen. No doubt, the uncertainty over the introduction of SST will continue to haunt the OEMs for now.

The question on how the SST will be implemented and how it will effect the pricing of cars remains unanswered. Surely, manufacturers will work on their own campaign strategy  moving forward. For now, the vacuum created by the move to zero rate the GST will certainly act as the much needed booster to improve the automotive market condition.

The "Tax Holiday" effective from 1st June until the unspecific date will make the car prices lower by 6 percent. This is for sure. Demand for cars is expected to grow drastically (relative to the last few months), especially during 1st half of June in conjunction with Raya sales buying pattern. Hopefully, the RM0 GST  will continue  to push for higher sales after Raya and continue in July sales as well. Typically, July (specifically post Raya) is a very quiet month due to high public spending in preparation for Hari Raya celebration before that.

Another interesting announcement made by the new government is on PTPTN. It was said that now  PTPTN borrowers earning less than RM4,000 a month can differ the payment until certain period and released from any restriction. Meaning, they now can apply for the Hire Purchase facility to buy car and will be treated without prejudice of PTPTN status. This is a very positive move to enable for the return of more  First Time Buyers (FTB) into the market. In the past  few years, PTPTN defaulters were blacklisted in many things, including (as a result of the Prudent Lending Guidelines imposed by BNM) from getting the Hire Purchase loan to buy cars. Now (according to the news), they can.

The combination of the three factors, the "Tax Holiday", "PTPTN" and the "Raya Buying Mood" will definitely make June an exciting month for the automotive industry.

Meantime, many OEMs have comes forward to announce the rebate on GST prior to 1st June. This was done to protect the market from further drop in May. Customers now have the option to enjoy lower prices earlier than the Zero Rated GST implementation. But why must they buy now as it is only a week to go before 1st June?

The answers are:

1. Under the rebate scheme, the HP is still approved with GST amount. The GST still need to be paid to the  government. The manufacturers will rebate the amount to the buyer.
2. The rebate amount can be used to cover for the downpayment for car or ease the loan re-payment for few first months, or keep it in the pocket (for Raya spending perhaps?).
3. It is in-fact a huge discount like never before
4. All the above will no longer apply from 1st June onwards as there is no GST anymore. It is a direct price down.

For me, the option is yours. Either way, you get to buy car at lower price now, one is with opportunity to recover some cash from the spending and the other one is you will spend a bit less.