CIMB Predicts Minimum Impact Of SST Expansion In Auto Sector

CIMB Securities reportedly predicts that the upcoming SST expansion will not affect the local auto sector directly.

With the upcoming sales and service tax (SST) expansion starting July 1 onwards, analysts over at CIMB Securities have put out their predictions of said new levy’s impact on the auto sector.

For this, the financial institute predicts the local auto sector will experience limited direct impact from which, reports Bernama Biz citing a research note issued by the firm.

Through which, CIMB Securities also notes that no changes will come to vehicle sales tax, which is presently set at 10%.

The same applies to service tax for maintenance and repair services, which are presently set at 8%. As for consumables like tyres, their existing 5% SST levy are set to continue.

Instead, the firm reckons the SST expansion mentioned will see a slight increase to dealership and showroom rental costs.

Instead, CIMB Securities predict a slight increase in dealership and showroom rental costs stemming from the expanded SST scheme mentioned.

Indirectly, CIMB Securities however expects weaker consumer sentiment could affect new vehicle sales in the second half (H2) of 2025.

Recently, the Malaysian Automotive Association (MAA) projected a 4.5% year-on-year dip in the total industry volume (TIV), revising its targets to 780,000 units. Adding to which, CIMB Securities forecasts a sharper 7% drop from which to 760,000.

The latter stems from the government’s impending RON95 fuel subsidy rationalisation, which is expected to take place in the second half of this year.

Both P1 and P2 are expected to retain their dominant 65.4% market share this year too, says CIMB Securities.

Despite so, CIMB Securities also adds demand in the sub-RM100,000 vehicles segment will remain resilient, supported by national brands Proton and Perodua, not forgetting selected entry-level models from Japanese makes as well.  Both P1 and P2 will retain their dominant 64.5% market share in 2025.

CIMB Securities also added a positive point from the planned RON95 fuel subsidy rationalisation mentioned, that being an increase in electric vehicle (EV) adoption.

This is bolstered by expectations that  duty exemptions for imported EVs are unlikely to be extended past its Dec 31 deadline. Speaking of, the firm expects a potential spike in EV demand in Q4 as buyers rush to benefit from tax savings.