Auto sales to pick up in Q2

  • Auto
  • Thursday, 07 Apr 2022


PETALING JAYA: The first quarter of 2022 is expected to produce slower auto sales before the pace sees an uptick in the second quarter, just before the sales and service tax (SST) exemption ends.

Kenanga Research said it expects most automotive players to chart slower sales in the first quarter following the strong quarter before it as well as a result of the floods in December 2021, which disrupted certain suppliers’ operations.

“The second quarter is expected to deliver better numbers as automakers rush to deliver back-logged bookings before the ending of the SST exemption (by June 2022) to avoid cancellation by consumers,” it told clients in a report, adding that the SST exemption extension to end-2022 was at a proposal stage.

With the reopening of economic activities and ongoing sales tax exemption, it expects a buoyant recovery in car sales as evident from the growing number of back-logged bookings for popular models and the stream of new models launches in 2022.

“Additionally, battery electric vehicles’ new launches are expected to be boosted by the full exemption of import and excise duties, sales tax, road tax, and individual tax relief of up to RM2,500 for the costs of purchase, installation, rental and subscription fees of electric vehicle charging facilities,” it said.

Nevertheless, for certain models, the recovery of car production could be limited by the on-going global constraints in semiconductor chip supply, it noted.

“Auto makers have prioritised usage of such resources, diverting any precious semiconductors they have to their most profitable vehicles such as full-size trucks and sports utility vehicles or SUVs, as well as luxury vehicles.

“The Malaysian Automotive Association is currently vying for a further SST exemption extension to the end of 2022 as the current chip shortage is limiting auto makers’ ability to maximise their production capacity to meet backlogged demand which stretches up to six months for certain models,” it added.

The research house has maintained its “neutral” call on the local automotive sector with a 2022 total industry volume target of 600,000 units. It said notwithstanding the still high inflation outlook, improving financial and employment expectations are “beefing up” consumers’ shopping plans for the coming months.“Various government assistance measures announced will help to maintain some consumer confidence for the rest of the year; particularly the exemption of sales tax for passenger vehicles (mid-June 2020 to June-2022) and the extended loan moratorium for financially distressed individuals.

“This prevented the general household financial situation from worsening and with the anticipation of better income and job prospects, consumers are expecting brighter days ahead, but not without growing jitters over rising essential item prices,” it said.

“Overall, passenger vehicles’ loan approval rates show optimism at 56.3% despite just recovering from two months of lockdown, compared to the lowest of 31% in April 2020 during the enhanced movement control order.

“Concurrently, the employment rate showed positive development with the unemployment rate at 4.2% in January 2022 compared to January 2021’s rate of 4.9%.”

Catch up with the auto world! Visit at to get the hottest news and reviews on cars and more

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 0
Subscribe now to our Premium Plan for an ad-free and unlimited reading experience!

auto , sales , service , tax , SST


Next In Business News

CPO futures likely to trade with downward bias next week
Rupee erases gains on banking worries
MSMEs still at early stage of digitalisation
The global game of ChessGo
Banks remain on the radar
KAB looking to boost earnings via PetGas sustainable energy JV
Are our banks safe?
Vivek Sood appointed as Axiata CEO, MD
Fed’s dovish slant forecast to buoy the ringgit
Short Position: Break-up pays, Hap Seng's RPT

Others Also Read