KUALA LUMPUR (May 18): AllianceDBS Research said with the Goods & Services Tax (GST) being eventually replaced by Sales & Service Tax (SST), auto players will likely revise car prices upwards marginally.

In a strategy note May 17, the research house said most of them revised car prices downwards after GST was implemented in Apr 2015.

For example, it said post GST implementation, Perodua cars were cheaper by 0.2%-1.6% and Toyota cars were cheaper by 0.1%-1.9%, depending on the models.

“With the government lowering the GST rate to zero starting June 1, 2018 until it is abolished and replaced by SST via new legislation, questions arise whether car prices will be lowered instead from June 1 until SST is implemented.

“However, it is unlikely for auto companies to lower prices by the full 6% given that input GST would have been paid on existing inventory.

“A price cut could boost sales volume as potential car buyers may accelerate their buying decision,” it said.

The research house said having said that, sales volume will most certainly dip once SST comes into force.

Beyond GST abolishment, the PH government also pledges to reduce excise duty on imported cars below 1,600 cc for first car purchases by households with monthly income below RM8,000.

“There are no indications yet when this will take place or how much of the existing 65%-75% excise duty will be reduced.

“This measure will lead to improved sales of imported cars below 1,600 cc at the expense of locally manufactured cars.

“Notable auto stock in our coverage universe with a Buy call is Bermaz Auto Bhd which stands to benefit from these measures,”it said.