Analyst Liaw Thong Jung said the bank also expects the situation to give rise to issues involving salesmen and dealers over the next nine months.
The decision to end the sales and service tax (SST) holiday as per scheduled until June 30 2022 with earlier bookings involving 264,000 units to continue to enjoy the waiver until March 2023 is fair, according to the bank. But this will likely create unnecessary operational issues, Liaw wrote in his report.
He said speculative bookings will rise over the next 10 days. It is envisaged that many prospective and speculative buyers will take advantage of the situation and place token deposit bookings until June 30 just to lock in orders.
“That would skew bookings because prospective buyers can cancel or transfer their orders and secure deposit refunds anytime, which poses a disservice to salesmen and dealers.
“Based on that alone, vehicle bookings will be at a super-normal rate in June but are expected to fall drastically in July or the second half of 2022 (H2 2022),” he said in a research note today.
“Insensitive” buyers may also place orders by end-June 2022 but request for a 2023 delivery in order to make a price gain, because a 2023 delivery would effectively mean that it is a 2023 vehicle, instead of a 2022 one. This will result in a weaker H2 2022 in the sector and a strong first quarter 2023 (Q1FY2023), the report said.
The research house’s 2022 total industrial volume forecast remains unchanged between 580,000 and 600,000 units.
The report said the various tax holidays – the current one being the third – have proven to be a popular policy to drive sales with 868,422 units sold during this period.
While the revenue loss from the waiver totalled RM4.7 billion, according to the finance ministry, the research house reckons the revenue gained from the excise and import duties collected during the period far outweigh the SST loss, the report said.
Without the waiver, collections from excise and import duties would likely be lower due to lower car sales.
“Excise duties alone accounted for 67% of automotive tax in 2019,” the report said.