New vehicle sales in Malaysia fell by 15% to 42,983 units in May from 50,594 units in the same month of last year, according to registration data released by the Malaysian Automotive Association (MAA).
The association claims the newly-elected government’s announcement in mid-May that it would scrap the goods and service tax (GST) at the beginning of June created uncertainty among buyers regarding future prices. The tax system was introduced just three years ago by the previous government.
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Shares in major automotive groups including Proton jumped following the announcement on the expectation that car prices may drop and domestic sales could rebound as a result of the tax change.
Cumulative sales in the first five months of the year fell by 3.8% to 225,212 units compared with 234,180 units a year earlier. Sales of passenger cars were down by 3.4% at 203,299 units, while commercial vehicle sales declined by 7.7% to 21,913 units.
Vehicle production year-to-date was up by 8.3%at 241,582 units from 223,139 units previously.
Newly-elected Prime Minister Mahathir Mohammed also confirmed earlier this month that his government would explore opportunities to establish a new national car company after the sale of a substantial stake in Proton to Chinese automaker Geely.
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