PETALING JAYA: Sales and production of new vehicles are expected to undergo a minor squeeze in 2024 as compared to last year, on the back of an uncertain global economy and a slowdown in consumer spending, according to the Malaysian Automotive Association (MAA).
The unpredictability of worldwide macroeconomic conditions is exacerbated by ongoing geopolitical conflicts such as the Israel-Hamas war and the recently begun Red Sea Crisis, although the Malaysian economy is anticipated to grow by 4% to 5% this year, it said.
MAA president Mohd Shamsor Mohd Zain told a press conference here yesterday that the concerns over targeted subsidy rationalisation, high cost of living, implementation of the high-value goods tax (HVGT), as well as increased tax rates for some services including motor vehicle repair and maintenance are factors that would influence consumers to exercise more prudent spending habits.
On the other hand, he said the projected decline in sales and production this year would be mitigated by much improved supply chains as well as ongoing new model launches, including for electric vehicles (EVs) at affordable and competitive prices, adding that these factors will attract and sustain buying interest among consumers.
It is also possible that the modest forecast for 2024 carries with it a “high base” factor, as total industry volume (TIV) for sales of new motor vehicles last year had risen by a strong 11% year-on-year (y-o-y) to 799,731 units, a second consecutive annual all-time high, compared to a TIV of 721,177 vehicles sold in 2022.
Out of the 2023 total, 719,160 units (or 90%) sold were passenger vehicles, with commercial units making up the remaining numbers.
The MAA’s discreet outlook for 2024 has led the association to forecast TIV to decrease by 7.5% y-o-y to 740,000, with passenger vehicles sold seen to reduce to 666,000, while commercial vehicles sold are expected to slide to 74,000 units.
Mohd Shamsor attributed the stellar showing of last year to a more stable socio-political environment in the country following the formation of the unity government, a resilient domestic economy and fulfillment of tax-free bookings.
“On top of those factors, there were also many new model launches including EVs with very competitive prices in 2023, coupled with a much improved industry supply chain environment globally,” he pointed out.
Furthermore, he observed that national vehicles, which comprised 67% of the total passenger cars sold last year, saw a 15% increase in units sold y-o-y, while non-national makes also experienced a 6% rise in sales.
Of particular interest is the fact that there were 38,055 electrified vehicles (xEV) sold in 2023, making up 4.7% of the total. The percentage itself is a 69% improvement over its proportion in 2022, where xEV’s sold only made up 3.1%.
Summarily, fully EVs and hybrid electric vehicles that still employ the use of combustion engines are subsets of the larger term of EVs.
Buoyed by the sales improvement of xEV’s in 2023, Mohd Shamsor believes the percentage of xEV’s sold in 2024 could reach 9% to 10% of the TIV for 2024.
He also said that as of October last year, there were 1,434 charging stations nationwide, as the government is keeping up its target of constructing 10,000 charging stations by the end of 2025.
“Additionally, we have made approaches to the government on our end, in terms of reducing red tape for the installation of such charging facilities, in our effort to speed up the number of charging stations in Malaysia,” he said.
He also revealed that the MAA is in talks with the government pertaining to the HVGT of 5% to 10% to be imposed on vehicles purchased that are in excess of RM200,000.
While conceding that the HVGT will be imposed, Mohd Shamsor is hoping for some consideration from Putrajaya, considering the already heavily-taxed situation of the automotive industry.
“We are having further discussions and dialogue with the government on the HVGT and we hope to complete these meetings by the end of February, as the HVGT is supposed to come into effect by May this year,” he added.
On the deferred new open market value excise duty regulations by the government that was announced last year, he said there has been no update so far on it.
The deferment, which gives the assurance that there will be no major price increase for cars due to duty or tax reasons, will expire by the end of this year, with the MAA possibly making another appeal before the expiry.
On a separate note, the MAA confirmed the return of the Kuala Lumpur International Mobility Show (KLIMS) – formerly known as the Kuala Lumpur International Motor Show – with the event set to take place from Dec 5 to 11, 2024.
Last held in 2018, Mohd Shamsor stressed that the KLIMS will remain a brand-driven show rather than a sales event and as such, the same manner of proceedings can be expected.
