KUALA LUMPUR, Nov 8 — The bumper sales that carmakers enjoyed during the three-month tax holiday will have to make up for dwindling sales next year, according to Fitch Solutions Macro Research.
The Fitch Ratings unit predicted that the Sales and Services Tax will weigh generally on consumer spending, with big-ticket items such as car purchases set to experience the brunt of this.
It predicted vehicle sales to grow by just 1.7 per cent in 2019 to reach 533,400 units.
“This muted growth in the domestic autos market will largely be attributed to the reintroduction of the 10 per cent Sales and Services Tax (SST), which will weigh on consumer spending in the country.
“In addition to this, we expect a weak local currency and rising interest rates to provide further headwinds to growth in the domestic car market,” it said in a report today.
Overall, Fitch Solutions also projected a 3.5 percentage point decline in the growth of domestic spending next year from 8.5 per cent in 2018.
Other factors that are set to weigh on auto sales include the prevailing weakness of the ringgit in the currency market and projected monetary policy changes in the US.
“These factors will, therefore, put pressure on consumer spending ability and in turn growth in new auto sales in Malaysia.”
Source: The Malay Mail Online