OMV Revision Deferred Until 2026, CKD Car Prices Potentially Seeing 10-30% Increase

Following the announcement of Malaysia’s highest Total Industry Volume (TIV) year in history, MAA has just announced that the open market value (OMV) excise duty revision will be deferred until 2026.

Currently, the OMV excise duty (Determination of Value of Locally Manufactured Goods for the Purpose of Levying Excise Duty) has expired on 31 December 2024, meaning that if the revisions were to be implemented this year, buyers in the market would see a flurry of price changes for CKD vehicles, but we haven’t seen of the sort anything so far.



For those who don’t know what this means to you, here’s some context. Open market value or OMV, is the cost price of a product after it’s out of the machine assembly before the government imposes excise duties. 

Before the revisions, buyers only had to pay for the manufacturing-related items for the vehicle, but now unrelated costs such as administration, marketing, sales and even profit costs are factored into the revised equation. It's like buying a normal bottle of water, but now you pay double the price to cover factory costs, designing the label and advertising campaigns. Not exactly appealing, right? This generates a significant price hike among CKD vehicles, which could see a 10-30% increase in price.

When this revision was announced on the last day of 2019, industry players and the people were obviously furious from the news. However, the finance ministry deferred the revision in 2020, then 2021 and once again in 2022 for two more years. This leads us to where we are today, where they promised this will be the last delay.

“We are very concerned. Based on our understanding right now the 402 (revisions) will be implemented by January 2026. If that really happens, there will be an average price increase of between 10% to 30% for CKD cars," MAA President Mohd Shamsor Mohd Zain explained at MAA’s briefing yesterday.

“As far as MAA is concerned, we are now looking into ways on how we can engage further with the government, we will continue the engagement before the deadline."

"If that happens, there will be a lot of spiral down effects for the future years, in terms of lower sales, lower volume, especially for CKDs. It will also have an impact on our local industry, especially our suppliers. There’s a lot of after effects that we’re concerned about. We will continue to engage and hopefully we’ll be able to get some kind of understanding and also an alternative way to overcome this,” states Zain.

With the impending revisions, the automotive industry and market are looking down a very treacherous timeline. Not only do customers have to pay extra from miscellaneous items like IP licensing and development costs, but automakers won’t bother to make more assembly factories locally as the costs are hard to swallow, eventually bringing in CBU imports that further hurt the industry. Production will also take a hit and there will be a decrease in job opportunities.

Although this is a heavy blow, we could see another TIV record this year from the fear of price hikes in 2026. As for what happens after, uncertainties will remain, but there’s a chance that the industry will adapt and navigate the changes effectively.


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