Perodua has around 220k outstanding bookings - will absorb SST ...

Car buyers in Malaysia took full advantage of the government’s decision to exempt passenger cars from sales and service tax (SST), which was done as part of efforts to stimulate the automotive industry and the country’s economy affected by the Covid-19 pandemic.

First announced on June 5, 2020, the SST exemption was extended three times and came to an end on June 30 last year. However, while many placed bookings to secure the exemption, deliveries have not kept up, which prompted the government to allow the SST exemption to apply for any car booked before the June 30, 2022 deadline as long as it is registered before 31 March 2023.

Perodua is one of several car companies with a large order bank on its hands, and during yesterday’s outlook media conference, the carmaker revealed how it plans to deal with the issue. “Currently, the total outstanding bookings that we have is around 220,000 units. It is a good problem but still a problem. We cannot sleep at night because 220,000 customers are waiting for their cars,” said Perodua president and CEO Datuk Zainal Abidin Ahmad.

“Firstly, our plan is to make sure that by the end of March, customers who booked because of the Penjana programme without sales tax should get their vehicles. Because after March 31, sales tax will be imposed. However, based on our current studies and planning, we realised it’s difficult for those customers to get all their cars by March 31. There will be a spillover, but I’ve mentioned many times that for Perodua, we will honour (the sales tax exemption),” he continued.

“For example, if a customer booked (during the SST exemption), if we have to absorb the sales tax even if the delivery is after March 31, we will do it. We will make sure. I think because customers are very important. They book our cars during at the time where there’s no sales tax, and it is our problem that we cannot deliver the car by March, therefore we have to honour (the sales tax exemption),” Zainal explained.

“The problem is when there’s a full model change or price difference, then we have to manage this carefully. I don’t have the numbers now on how many customers are affected and we have to wait until the end of March to see how many customers have yet to receive their cars, but they booked under zero sales tax, then we will make an announcement later on. Rest assured that we will make sure that they will also enjoy whatever sales tax benefit if they continue with their booking,” he added.

Perodua also said it will prioritise the 220,000 waiting customers with its planned production of 330,000 units this year, although it isn’t sure when the sales tax-free order bank will be emptied. For those who have booked the old Axia and are curious if they can convert their booking to the new D74A model that recently opened for booking, the carmaker also provided a response.

“Existing Axia customers waiting for their cars are encouraged to convert to the new model if they can’t get their car, the old stock. We expected there will be a few thousand bookings where customers won’t get the old Axia because production of the old Axia ended by the end of this month (January), and the new Axia started production from the end of January,” Zainal said.

“However, when they convert, we will make sure that whatever benefit customers were supposed to receive then, we will subsidise (the sales tax) even though the new Axia has a different sales tax. For example, the old Axia’s sales tax may be RM1,500 while the new one is RM2,000, so we will subsidise. Because customers who convert to the new Axia, they are loyal to Perodua,” he continued.

Originating from the corporate world with a background in finance and economics, Gerard’s strong love for cars led him to take the plunge into the automotive media industry. It was only then did he realise that there are more things to a car than just horsepower count.