Used car dealers resort to absorbing 6% GST to attract buyers


  • Community
  • Monday, 04 May 2015

Staying afloat: Most used car dealers are trying to retain customers by absorbing the GST.

SECOND-HAND car dealers have resorted to absorbing the 6% Goods and Services Tax (GST) from their sales to attract customers.

Most of those interviewed by MetroPerak said it was the only way to retain their customers and businesses.

Lam Kwong Wah, 55, said that people often get discouraged from buying used cars when they hear about the GST.

“They are just not willing to fork out that extra 6%.

“Most used car dealers will try to offer their best prices to retain the customers, subsequently absorbing the 6% upon request by our customers,” he said.

“For example, if we sell a RM20,000 car for RM22,000, our profit is RM2,000. The 6% GST from RM2,000 is about RM120 and it would be absorbed by us,” he added.

Under the GST, used car prices are subject to it but these prices are however placed under a Relief for Second Hand Goods Margin Scheme to avoid double taxation.

GST would be imposed on dealers based on their profit from sale.

Wong Kin Long, 48, said there was plenty of challenges now and the implementation of the GST was bad for the industry.

“There is not much change to the prices of used cars.

“The longer a car is not sold, the more its value will depreciate,” he said, adding that he would always try to offer his customers the best price, which included absorbing the 6% tax.

“If they are not happy with the price I am offering, they might just go to another dealer,” he said.

“Sometimes, I have no choice but to sell off a second-hand car real cheap,” he added.

Wong said another issue plaguing the used car industry was the problem with the downpayment by customers.

“There are some who just cannot afford to fork out a sum as they cannot get loans from banks.

“I hope the Government will implement a policy or instruct banks to lower their loan rates so people can pay their downpayment,” he said, adding that banks could adjust the loan rate according to the sales of cars.

“I hope banks will also relax regulataions on loans so that people can afford to buy cars,” he added.

He also said that many people were adopting a wait-and-see approach.

“This is affecting the market as a whole.

“I will try to hold on to my operations for as long as I can,” he said.

“I have heard of other dealers closing down their operations as they cannot comprehend the GST system or overcome its effect on their businesses,” he added.

Wong Yin Tack, 46, said there have been less walk-in customers compared to before.

“People think that used car prices have gone up due to the GST, but this is not true.

“There are no changes to the prices of used cars,” he said.

“I understand that many people, especially those with families, have other commitments, such as paying for household and daily expenses,” he said.

Yin Tack said he managed to sell more than 10 cars in March, and about six in April.

“The economy is still slow so it’s hard to say what my outlook would be by the end of the year,” he said.

“We are trying our best to boost our sales through word of mouth,” he added.

J. Rajinikanthan, 32, said many car companies have reduced the prices of new cars after GST was implemented.

“I think that people now prefer to buy new cars rather than used ones.

“I feel this is the case as sales have been low since April because of the GST,” he said.

“I managed to sell 10 used cars last month but just one this month,” he added.

Rajinikanthan also said that he felt that the GST has also affected the people’s decision to sell off their cars.

“I am not sure of the main reason but there are less people selling their cars,” he said.

“Perhaps the people feel that they would be selling off their cars at a lower price and can’t get 6% extra from the sale,” he added.


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