MAA: GST is not a big issue, but the exchange rate is

PETALING JAYA: The Malaysian Automotive Association (MAA) said the depreciation of the ringgit will play a more significant role in determining car prices in the future, than the implementation of Goods & Services Tax (GST) in April.
"GST is not a big issue to us. The biggest issue to us right now is the exchange rate. Most car companies right now are paying for the completely-knocked down (CKD) and completely built-up (CBU) vehicle taxes and other multi-sourcing parts in US dollar, which has appreciated more than 10%," its president Datuk Aishah Ahmad told reporters after the 16th MAA's annual general meeting here last Friday.
The ringgit is the worst performing currency in Asia this year with some economist expecting the currency to depreciate further to RM3.95 against the dollar by September.
"We must bear in mind that car prices go up every year. So not every company will have savings from GST, from the 10% sales and services tax (SST) to 6% GST," she added, noting that higher exchange rates would therefore translate to a bigger amount of excise duties paid, which would significantly increase a car's price.
"Therefore, when they (car companies) do their computation, they will need to decide whether there is a possibility to reduce, maintain or increase the car prices."
Commenting on the car prices post-GST, Aishah said although some car companies would reduce the vehicle prices come April 1, the current car prices offer is much better, given that most car companies planned to reduce their stocks, in which the Sales and Services Tax (SST) had been paid.
"Industry players are clearing stocks which sales tax had been paid. They are offering very attractive incentives to clear the stocks. So I would urge customers to buy the vehicles before GST," said Aishah.
She said even if there is a slight decrease in vehicle prices post-GST, the car buyers would not get as much as the car companies are offering currently.
She also noted that the car companies are expected to announce their lists of post-GST vehicle prices in the first week of April.
"We leave it to the car companies to decide what is the best prices that they can offer. But they also need to bear in mind there is competition. They will have to make sure that they come up with the most competitive prices, in order to maintain their market share," she added.