Assuming that the government does not extend the current sales tax (SST) exemption for locally-assembled (CKD) passenger cars, prices are set to increase after 30-June 2022, after which the 10 percent SST resumes.
However, the new SST inclusive price will not simply return to pre-pandemic levels, but higher.
The Ringgit is now trading at RM 4.40 to 1 US Dollar, its weakest since the ‘98 Asian Financial Crisis.
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As Malaysia’s leading non-national car brand that sells a wide range of vehicles catering to all income groups, UMW Toyota Motor is working hard to contain any further increase in prices of its cars.
According to an investors’ report published by RHB Investment Bank, UMW Toyota Motor is negotiating with its principal and is working on its own cost reduction measures to limit the impact of unfavourable foreign exchange.
The report also noted that a second round of increase in prices may be possible in the third quarter of 2022. Note that the UMW Toyota has already announced higher, SST-inclusive prices for most of its models as it could no longer fulfil new orders before 30-June 2022, the cut-off date to qualify for SST exempted prices.
On the upside, demand for Toyota cars remain high. Even after announcing the higher SST-inclusive prices, the company is not seeing any drop in orders.