On the other hand, Aishah said, the number of electric vehicles (EVs) sold is expected to increase this year as many new models are launched and further tax incentives will boost EV sales.

PETALING JAYA (Jan 19): The Malaysian Automotive Association (MAA) forecasts that total industry volume (TIV) will decline by 9.8% in 2023 after surpassing the 700,000 mark in 2022.

Annual TIV is expected to decline from 720,658 units in 2022 to 650,000 units in 2023, mainly due to the expiration of the sales tax exemption on March 31, 2023, according to MAA president Datuk Aishah Ahmad.

"Some companies have also indicated that the number of booking orders may slow down after the sales tax exemption is no longer available," she told the media at a press conference on Thursday (Jan 19).

The MAA president shared that the government may not extend the sales tax exemption since it has done so for three years due to the Covid-19 pandemic.

In addition, the automotive industry continues to face supply chain challenges and issues, such as a shortage of semiconductor chips, uncertainties in the geopolitical situation, and a possible recurrence of Covid-19 cases worldwide, which could impact the country's economic growth momentum and thus new vehicle sales.

Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad (Photo by Patrick Goh/The Edge)

"Many economists and analysts foresee the global economy's growth slowing down and even falling into a recession this year.

"Prices of raw materials [to make cars] will increase. Our ringgit has also weakened against other currencies. If the cost of raw materials is higher, how can we sell cars at a loss?

"And I think people are also more cautious about buying cars," Aishah explained.

Higher annual TIV in 2022 was attributed to pent-up demand for new vehicles, especially in the first half of 2022, and was further boosted by the authorities' decision to allow buyers with confirmed bookings — with sales tax exemption and submitted before June 30, 2022 — to register their new passenger cars.

Out of the 720,658 units recorded in 2022, Perodua recorded the highest number at 282,019 units, followed by Proton (136,026 units), Toyota (100,041 units), Honda (80,290 units), and Mitsubishi (24,017 units).

During the year under review, both the passenger car and commercial vehicle segments recorded very high sales growth.

Total new registrations of passenger cars rose to 641,773 units in 2022, up from 452,486 units in 2021, while the commercial vehicle segment also saw new registrations rise to 78,885 units in 2022 from 56,397 units in the previous year, as companies began to invest in anticipation of an economic rebound after two years of decline due to the Covid-19 pandemic.

Monthly TIV also peaked to an all-time high of 76,657 units in December 2022, compared to 65,201 units in November 2022.  

Appeal to extend EV incentives until 2030  

On the other hand, Aishah said, the number of electric vehicles (EVs) sold is expected to increase this year as many new models are launched and further tax incentives will boost EV sales.

"It will be higher than the 2,631 units sold in 2022 and the 274 units sold in 2021, but we have not yet projected the actual numbers for 2023," Aishah said.

The MAA is also appealing to the government to extend incentives for the EVs — exemption from import and excise duties — for a longer period, if possible until 2030, said Aishah.  

"We already have 1,000 charging stations for EVs, and the government is aiming for 10,000 charging stations by 2025.  

"We believe extending the incentives on a year-on-year basis is not enough. We expect the government to extend these incentives until 2030, as opposed to December 2024. We will wait for the new budget," Aishah said.

Last October, the government under the administration of former prime minister Datuk Seri Ismail Sabri Yaakob announced the extension of the import and excise tax exemption on EVs until end of December 2024 for completely built-up and completely knocked-down EVs to encourage the use of EVs in Malaysia.