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,Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said the time extension will assist car companies to clear the backlog of orders received from customers. “Hopefully, the shortage of chips and components would be resolved by then. “The MAA would like to thank the Finance Ministry (MoF) for this extension to assist in clearing the backlog of order banks,” she told StarBiz.

KUALA LUMPUR: The discontinuation of the vehicle sales tax exemption beyond this month may create a brief spike in demand for cars for the rest of June and result in a potential sales glut for the remainder of 2022.

An analyst said there could be an “order avalanche in the next 10 days” as potential car buyers will want to take advantage of the limited time left before the tax holiday ends.

“Key implications include a likely surge in orders for the rest of June, bringing forward some sales from the second half of 2022.

“Customers are unlikely to cancel orders post-June 2022, as they may still receive the vehicles before March next year,” he said.

An industry observer cautioned that the discontinuation of the sales tax exemption, which has been in place for two years, could have the same implications as the tax holiday that was implemented in 2018.

“When the government zero-rated the goods and services tax or GST for three months in 2018, it resulted in a spike in demand for vehicles. After the tax holiday ended, car sales were affected for quite some time.”

In a statement yesterday, Finance Minister Tengku Datuk Seri Zafrul Aziz said the vehicle sales tax exemption will end on June 30 as planned.

In his statement, Tengku Zafrul said the extension of time until March next year (to register vehicles booked during the sales tax holiday) was a “midpoint solution” to balance the interests of consumers and the national tax revenue. A total of 868,422 vehicles have been sold and citizens have benefited from a sales tax exemption amounting to RM4.7bil, he noted. “With the reopening of the economy, operations within the local automotive sector have returned to normal.”

He added that buyers who had booked their vehicles during the tax holiday period have until March 31, 2023 to register their vehicles with the Road Transport Department.

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