Malaysians, brace yourselves for (yet another) price increase. According to Paultan, car prices could spike by 10-30% next year. The government is introducing a “new” regulation for excise duty on locally assembled cars.
The regulation will change how a car’s Open Market Value (OMV) is determined.
To keep things simple, OMV is the cost price when a car leaves the factory. It is also the value upon which the excise duty is imposed by the government.
Currently, only manufacturing-related items are taxed. But from 2026 onwards, the new regulation will add non-manufacturing items to the OMV, including:
- Sales
- Marketing costs
- Profit
- Administrative expenses
Naturally, with a longer list of items, the final cost of the car will increase, attracting higher taxes.
Additional items included in the OMV calculation (sourced from WapCar)
As usual, these additional costs will eventually trickle down to the consumer.
We will have to pay extra for unrelated costs such as development, IP licensing, marketing, and administration.
From one of Paultan's recent videos, the price of Perodua Myvi will jump by RM6,000, Honda Civic +RM30,000, and Toyota Vios +RM20,000.
Imagine paying 10-30% more for McDonalds just because of an ad you saw online.
This revision will only impact locally assembled (CKD) cars.
So if prices of CKD cars go up by 30%, carmakers will probably stop manufacturing and just bring in imported (CBU) cars.
Over the long run, this would be detrimental to the automotive industry and country, as production and job opportunities decline.
The regulation on excise duty is actually not new.
It has been deferred twice since its introduction in 2019. The first deadline was 31 Dec 2022 and again on 31 Dec 2024.
According to WapCar, the Ministry of Finance stressed that there will be no further extensions and is looking to enforce it by 1 Jan 2026.
Cited from multiple sources: