Industry players are hoping for the govt to extend moratorium until year-end to help sustain the sales momentum
by RAHIMI YUNUS / pic by MUHD AMIN NAHARUL
THE sales of Malaysia’s used car segment jumped 15% year-on-year (YoY) to 37,880 units last month, attributable to tax incentives and a rise in safe private transportation demand.
Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor Chong Boon said used car dealers posted gain about 25% YoY to some 36,000 units in July.
However, he cautioned that the growth in demand may decelerate after September when the moratorium on loan repayment ends.
“July and August were very good months for us, but we are very worried for next month after the moratorium ends,” Khor told The Malaysian Reserve recently.
He added that the overall economy is expected to slow down without moratorium extension and it is expected that the automotive industry outlook will be impacted.
As it is, he said, industry players are hoping for the government to extend the loan moratorium for another three months until year-end to help sustain the sales momentum for not only used cars, but new vehicles too.
Khor said the increase in used car sales volume correlates with higher sales in new vehicles which led to higher supply.
He said about 67% of new car buyers traded in their old vehicles to buy the new ones.
“Used car business very much depends on stock intake. More people buying new cars means we get more supply to sell used cars, hence, bigger sales volume,” he said.
Khor said the sales tax initiatives — which provide tax exemptions of 100% for locally assembled vehicles and 50% for imported units for six months until December — also led to a price reduction in used cars by 2% to 4%, while new vehicles became cheaper by up to 6% and 7%.
“When new car prices drop, used cars will also follow. Used car pricing goes in tandem with new cars,” he added.
Khor further said the volume has been boosted by orders made in March to May, but only transacted now due to movement restriction order.
Khor further attributed the increase in sales to greater interest among consumers to choose private transportation as it is deemed safer on the back of the virus pandemic.
The used car segment in the country has been struggling to remain competitive with over 20 years of stagnant sales that hover around 400,000 units a year.
On the contrary, new vehicle sales reach 600,000 units annually with new launches, aggressive promotions and prices decline, making second-hand cars a hard sell to buyers.
The second-hand car business may seem lucrative, but dealers are facing low levels of customer confidence towards used cars, value depreciation of these cars and strict hire purchase financing.
Used car dealers have been shifting to online classified and listing sites to reach out to more customers to boost sales.
They responded to the birth of various automotive websites that provide car-selling platforms such as mudah.my, motortrader.com, carlist.my and carsome.my, which forced traditional second-hand car dealers with physical compounds to adapt and change their business model.