Kuala Lumpur, El Sky News – The Malaysian automotive sector is bracing for a potential significant increase in vehicle prices, with projections indicating a jump of 10% to 30% for locally assembled (CKD) cars starting in January 2026. This anticipated hike stems from the full implementation of a revised excise duty regulation, specifically the Excise Duties (Determination of the Value of Locally Produced Goods for the Purpose of Levying Excise Duty) Regulations 2019 [P.U.(A) 402/2019].
📈 New OMV Calculation Triggers Concern
The core issue revolves around the fundamental shift in how the Open Market Value (OMV) of CKD vehicles is calculated.
Under the current, older methodology, OMV computation primarily focused on the manufacturing cost of the vehicle. The new regulation, however, mandates the inclusion of several non-manufacturing costs into the OMV base, such as:
- Marketing and Sales Costs
- Administration Expenses
- Profit Margins of the car manufacturer
Since the excise duty is levied as a percentage of the calculated OMV, the inclusion of these extra cost components is expected to inflate the OMV, leading directly to a higher excise tax burden, which the industry will likely pass on to consumers through elevated final retail prices.
🏛️ Government Assurance vs. Industry Urgency
Despite the alarming projections, the Ministry of Finance (MOF) and the Ministry of Investment, Trade, and Industry (MITI) have attempted to alleviate public concern.
- MOF’s Stance: The MOF has previously labeled media reports projecting sharp price increases as “inaccurate” and “not final.” They maintain that the final valuation method is still under close scrutiny with the goal of ensuring the tax implementation is fair, uniform, and minimizes negative repercussions on the domestic automotive market and consumers.
- Industry Response: The Malaysian Automotive Association (MAA) has strongly urged the government to finalize the valuation framework urgently. MAA highlights that the delay in establishing the definitive new OMV formula creates business uncertainty and hampers planning. The Association stressed that the industry requires a minimum of six months to make the necessary adjustments before the regulation takes effect in early 2026.
⏳ The Road Ahead
While the government continues its review, the industry’s profitability and affordability for consumers remain at stake. A definitive decision on the final OMV calculation method is highly anticipated in the coming months, as it will determine whether Malaysian car owners will face the significant price hikes projected by the industry beginning in 2026.
