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Cars are cheaper. How much cheaper? Do you need one?

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Unless you did not read your Whatsapp or logged on to Facebook, you should know that cars will become cheaper because the government has decided to waive 100% of the sales tax on completely knocked down vehicles and 50% for the completely built up (CBU) vehicles. Both these vehicles have a 10 percent sales tax currently. The waiver will be from middle of June until end of December 2020. In other words, if you seriously need a car, now may be a great time to get one and at the same time, get enough discount for a cuti-cuti Malaysia. New car and holiday, same price. Why not?

Article in nst.com.my The Economic Recovery Plan’s incentives for the automotive sector will lower prices of new vehicles by three to eight per cent, said analysts. Analysts also said that prices of entry-level locally-assembled passenger vehicles, particularly Proton and Perodua, would be more attractive for buyers.

AmInvestment Bank Bhd analyst Jeremie Yap Jake Hui expects an extra 60,000 units in total industry volume (TIV) to 580,000 units for 2020 because of the incentives. Yap compared this to the previous tax holiday for SST and said, “Taking our cue from this and also having considered the softer economic condition at present compared to 2018, we forecast incremental sales of 10,000 per month over the next six months.” Please do refer to full article here: Article in nst.com.my

if you are eyeing a RM100,000 car, the price could be cheaper by RM3,000 or up to RM8,000 as per the analysts estimation. If it’s only a RM50,000 car, then one can save between RM1,500 to RM4,000. Will this cause the whole market to jump in and buy cars? One word, unlikely. However, what this will do is to make those needing a car make their decision faster so that they could enjoy this savings. For this group of people, they do need the car. It’s not a want.

Would there be people who just love cars more than properties? Definitely there are. For this group of people, even if there were no discount of 3% to 8%, they will still be buying a car and not a property. In other words, nothing has changed, just that now they could pay less for that car they wanted to buy. In other words, for the property market, nothing has changed because this was never a group for property anyway.

As for the rest who just needed a car but is okay to accept a second hand car instead, then rest assured that with new car prices getting cheaper, it will definitely affect the second hand car prices too. This is like the fact that if a new smartphone is released, the old model is likely to be cheaper. This is the same for property too. If all new properties are sold at a lower price, then it will also influence the selling price in the secondary market too. Do you really need a new car then?

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Next suggested article: Not true that we should just buy property but not cars

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