by RAHIMI YUNUS/ pic by TMR FILE
BUYERS are returning to car dealerships as coronavirus restrictions ease, but some dealers are attracting more interest than others.
People who go to car dealerships and put up with strict health guidelines now in place tend to be serious buyers who need to make a purchase, and they are choosing places that offer full service, including after-sales.
Dealerships with after-sales facilities are better positioned to recover from the impact of Covid-19 measures compared to rivals that rely solely on sales as showrooms reopen after nearly three months.
With the new norms, the number of walk-in customers received is 50% fewer, but dealers are dealing with more “serious buyers” this time.
“Dealers see half of the usual total of visitations. But the beauty behind it is that those who come mostly have ‘almost decided’ to confirm the purchase. There are fewer window shoppers,” an industry source told The Malaysian Reserve (TMR).
The source, who requested anonymity, said although the number of customers is lower, sales advisors can spend more quality time with prospective buyers to close sales at showrooms.
The source said local automotive players are evolving to provide more customer-centric services and other incentives to attract buyers due to the pandemic.
As such, the source said full-fledged one-stop centres of 3S or 4S (sales, service, spare parts and spray paint) will lead the recovery journey.
Proton Edar Dealers Association Malaysia president Liew Vee Lee said 3S/4S centres could survive better than 1S outlets in the coming months as revenue streams are diversified to other segments beyond sales.
Although sales have decreased, Liew said demand for workshop and maintenance services has helped his dealership sustain itself in the movement restriction period.
He said 3S/4S centres create a more comprehensive atmosphere that could attract a higher footfall of walk-in customers compared to 1S dealerships.
“During good times, income comes from sales and after-sales. But in difficult times, income comes from after-sales.
“It would be challenging if dealers were just relying on sales, especially in big cities where there are fights for better discounts and customers demand better value. Sales are always a bargain,” Liew told TMR.
TMR reported that the automotive retail segment is struggling with rental and overhead during the Movement Control Order (MCO) with zero customers and sales as businesses were forced to close and new car registry cannot be undertaken.
The pandemic has also resulted in businesses facing cashflow constraints, while many industry players are anticipating consumers to hold back on non-essential purchases, particularly big-ticket items like cars, in the coming months.
Perodua Dealers Association Malaysia president Khairul Nizam Ayob said the number of car showroom visits was “not bad” during the first week after the MCO got loosened. He said the footfall traffic was fuelled by pre-Hari Raya buying interests, which seasonally rose in previous years.
Khairul Nizam said dealers will be delivering more cars starting next month to fulfil bookings that were made previously.
Carmakers and dealers have resorted to using online platforms during the MCO to collect bookings, although the mechanism barely produces encouraging numbers.
Vehicle sales plunged almost 100% year-on-year in April to only 141 units — 131 passenger vehicles and 10 commercial vehicles — compared to 49,935 units recorded in the same month last year, according to Malaysian Automotive Association (MAA) data.
MAA said sales volume in May would be much higher than April, but very much lower than traditional monthly registrations before the MCO.
“Consumer confidence is not yet normalised, as well as sentiment is still very low. Automotive showroom traffic is very slow,” MAA said in a recent statement.
The association also said banks are more stringent in approving hire purchase loans, while reducing the financing quantum.