Budget 2014: MAA to seek extension of tax exemption on hybrid cars

Published: Saturday October 26, 2013 MYT 12:00:00 AM 

Updated: Saturday October 26, 2013 MYT 8:18:35 AM

Turnaround: Sales of hybrid vehicles changed dramatically in 2011 after
the Government introduced full import duty and excise duty exemptions.

THE Malaysian Automotive Association (MAA) will be appealing to the Government to extend the tax exemption on hybrid cars below 2,000cc, which ends this year.

“The association will be appealing to the Government for the incentive to be extended before they expire at the end of this year,” said MAA president Datuk Aishah Ahmadyesterday.

Hybrid cars have enjoyed tremendous sales growth in the past few years, after the Government introduced full import duty and excise duty exemptions for hybrid and electric cars and motorcycles two years ago under Budget 2011. The incentive applies to both completely-knocked-down and completely-built-up units.

One industry player who requested anonymity said he expected something “relating to tax exemptions on hybrid vehicles” to be made under the revised National Automotive Policy (NAP), which will be announced by year-end.

“We expect something under the NAP, where the policies are long term and provide better (long-term) insight for industry players. The policies under the budget however are short term and need to be regulated on an annual basis.”

An industry player that sells hybrid vehicles said he was disappointed that the tax exemption was not extended. “In a way, it was somewhat expected. But we’re hopeful that something will be announced under the NAP.”

According to statistics by the MAA, sales of hybrid vehicles were negligible before the exemption, with just 322 units recorded in 2010. This changed dramatically in 2011, with sales surging to 8,403 units.

It doubled to 15,355 units last year as more hybrid models were launched in the market. The hybrid car sales came from four marques, namely Honda (8,712 units), Toyota (5,653 units), Lexus (979 units) and Porsche (11 units).

On another note, an analyst said he expected car prices to be reduced slightly following the implementation of the goods and services tax (GST), which will take into effect from April 1, 2015.

“If the GST which is set at 6%, replaces sales tax, which is currently at 10%, then we do expect vehicle prices to reduce,” he said.

Meanwhile, Naza Group joint group executive chairman Datuk Wira SM Faisal SM Nasimuddin said the hybrid tax break would have given carmakers and importers a chance to reach that critical mass of energy efficient vehicle (EEV) sales to trigger local manufacturing.

“Hybrid cars could pave the way to the next generation of EEV technology and Malaysia should continue to position ourselves as receptive to new EEV technologies. EEVs are a sunrise technology and could well be the game changer for our local automotive industry. Perhaps something to consider next.”