MAA: OMV Is Coming, But the Industry’s Still Clueless

The Malaysian Automotive Association (MAA) has voiced concerns over the implementation of Excise Tax Regulations under P.U.(A) 402, which introduces a revised method for calculating Open Market Valuation (OMV) - the basis for excise duties on vehicles.

Scheduled to come into effect in January 2026, the updated OMV calculation is part of Malaysia’s alignment with World Customs Organization (WCO) standards. However, MAA warned that based on the old OMV method, prices could rise between 10% and 30%, potentially disrupting the market.

Authorities are reportedly working on a new calculation approach to minimise the impact, but no final details have been shared. MAA stressed that manufacturers require at least six months of lead time to make the necessary adjustments, and the current lack of clarity is putting strain on planning and pricing strategies for 2026 models.

Despite industry feedback, the government has indicated that P.U.(A) 402 will proceed as mandated by the Customs Act. Without assurances on how much vehicle prices will change, many players in the automotive sector remain uneasy.

MAA also highlighted several parallel developments that could add cost pressure. JPJ has proposed that car brands bear the cost of Vehicle Type Approval (VTA) and is pushing for physical plant visits overseas to better understand manufacturing standards.

Although these audits are not yet compulsory, they are expected to become mandatory in the future. The additional compliance requirements will inevitably lead to higher costs, which are likely to be passed on to consumers.

In the broader policy context, the MAA emphasised the need for consistent and long-term automotive policies under the upcoming 13th Malaysia Plan (RMK13). According to Honda Malaysia (HMSB) COO Sarly Adle Sarkum, consistency is key to supporting Malaysia’s ambition of becoming a regional automotive hub.

On the electrification front, MAA president Mohd Shamsor Mohd Zain noted that while electric vehicles (EVs) and other electrified vehicles (xEVs) are gaining traction, they still account for less than 5% of the total market. Without an extension of the current tax exemptions, the growth seen this year could slow dramatically, similar to what happened with hybrids when incentives were removed in the past.

Currently, there’s no indication from the government on whether EV incentives will continue, with a decision expected only during the national budget announcement in October. MAA warned this timeline is problematic, as brands need a minimum of six months to plan for CKD or product launches.

To support adoption in the interim, MAA is urging the government to extend partial tax exemptions, ranging from 50% to 75% to completely built-up (CBU) hybrids, mirroring approaches in other markets. This would help bridge the gap while local CKD hybrid offerings expand.

As the industry navigates these overlapping regulatory changes, MAA is calling for clear timelines, transparent implementation, and policy stability to avoid market disruptions and to help achieve the government’s 2030 targets of 20% EV and 50% xEV adoption.