Total Industry Volume

The declaration of Tax Holiday by the new government through the implementation of Zero Rated GST for 3 months starting 1^st June until 31^st August 2018, helps to improve the Malaysia automotive market to some degree. With RM0 GST for every purchase made during this period, the OTR price is lower by 6 percent. Something like this has never  happened in the past as sales of car (or purchase of car) has always been taxable. Prior to GST, car prices inclusive of 10 percent Sales Tax under the SST regime.

Judging from the sales result in June 2018, the market seemed recovered somewhat, annualizing the TIV possibly to 585,000 units from earlier projection of only 570,000 units, against the original target of 590,000 units. The TIV for the month of June is expected to rise over 63,000 units; the first for this year. This is 47.6 percent or 20,267 units higher than a month before and 12.8 percent or 12,979 units better than the same period last year. The YTD registration also increased by 4,011 units to 288,462 units compared to the same period last year.

We are now in the second month of the Tax Holiday. The biggest question is, can the OEMs sustain the June’s favorable result this July? As all brands are enjoying strong bookings, “stock is King”. Does the market have sufficient inventories to fulfill the demand? If the answer is YES, then the TIV for July is likely to stay strong as in June and will further strengthen the annualized TIV, perhaps to as high as 590,000 units. But again, do OEMs really have enough stocks or not?

Both Toyota and Honda did strongly in June. There were reports saying that Honda exhausted their stocks just before the end of month and Toyota probably drained their stocks after recording a record high registration. Based on what have been reported earlier, Proton is probably the only brand that still holding higher stocks despite registering 50 percent higher than normal last month.

Surely, all OEMs will try to do their best to increase their supply. Early birds will gain the most in realizing the booking into registration.

Perodua, after a superb performance of almost 22,000 units in May and with a scheduled 10 days of plant shutdown in June, suffered an acute inventory shortfall and only manage to register 19,611 units in June. Now that production is back to normal, Perodua is likely to rebounce strongly in July.

It will be interesting to see Malaysia automotive market to be strong again, even if it is only for short period during this Tax Holiday. It is still a most needed breather for all in the industry.

For me, am hoping that these 3 months will give enough buffer to cover the possible shortfall from September onwards as market is expected to freeze in the “digestion mood” due to possible increase in OTR price as a result of the re-introduction of SST.