Price of CKD cars may increase 8-20% next year, says MAA

KUALA LUMPUR: The price of locally assembled completely knocked-down (CKD) cars is expected to increase by eight to 20 per cent next year, based on the new open market value (OMV) excise duty calculation method.

Malaysian Automotive Association president Datuk Aishah Ahmad said however, the industry has asked the government to revert to the previous calculation methodology to avoid an increase in CKD car prices.

"The implementation of the excise duty was postponed in 2020 to end-2022, and will be enforced starting next year.

"We (MAA) have already submitted a proposal to the Finance Ministry (MoF) to revert to the previous policy which did not include non-manufacturing-related costs in calculating the OMV, thus lowering the car prices,” she said to reporters after chairing the MAA’s annual general meeting today.

However, she said the association has yet to receive any reply from the ministry.

The new Malaysian excise duty arrangement was prepared by the MoF during the Pakatan Harapan administration and was gazetted on Dec 31, 2019.

Aishah said the OMV is the final market value set for CKD vehicles fresh out of the factory, before the addition of the excise duty.

She emphasised that automotive companies would not be increasing their margins, and that the rise in car prices would be due to the increase in taxes.

"Buyers will be the ones affected by this move, and this, in turn, will cause car sales to drop," she said.

Meanwhile, Aishah said the MAA is also drafting an appeal to the MoF to further extend the sales and services tax (SST) exemption period for new vehicles, in light of the microchip shortage issue.

Previously, the government had extended the SST exemption period for new vehicles to June 30, 2022, under Budget 2022.