Malaysian Automotive Association (MAA) president Aishah Ahmad said, however, the industry had asked the government to revert to the previous computation method 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 next year.

“We have already submitted a proposal to the finance ministry to revert to the previous policy, which did not include non-manufacturing-related costs to calculate the OMV, thus lowering car prices,” she said to reporters after the MAA annual general meeting today.

She added that the MAA has yet to receive any reply from the ministry.

The new excise duty arrangement was prepared by the finance ministry during the Pakatan Harapan (PH) 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 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 affected by this move, and this, in turn, will cause car sales to drop,” she said.

Aishah said the MAA was also drafting an appeal to the ministry to extend the sales and services tax (SST) exemption period for new vehicles, in light of the shortage of microchips.

The government had previously extended the SST exemption period for new vehicles to June 30 this year, under Budget 2022.