Pandemic accelerates demand for used cars

Consumers are trying to decrease their time spent on public transport where contact is more likely, thus turning to private car ownership


INTEREST in buying used cars remains stable as the Covid-19 pandemic forces people to look for alternatives to public transport following government pandemic warning, said car selling website, Carsome Malaysia.

South-East Asia-based platform Carsome co-founder and group CEO Eric Cheng said consumers are trying to decrease their time spent on public transport where contact is more likely, thus turning to private car ownership and the shift was validated by the company’s consumer survey conducted in April 2020 with an expected 76% decrease in ride-sharing service usage.

“Coupled with the sales tax exemption for passenger cars in Malaysia, we are also seeing strong consumer demands in new and used cars.

“This has led to a higher number of car inspections across all Carsome inspection centres, with a notable rise in car disposals,” he said.

He added that in South-East Asia, the top three biggest markets are Malaysia, Indonesia and Thailand, having a market size of over US$40 billion (RM166.16 billion) in 2019.

“Even with our transaction value of US$600 million to date, we have only penetrated about 1.5% of the South-East Asia used car market.

“For Malaysia, we are at 7%. Our aim is to achieve 5% of the market share in Asean over the next five years,” he told The Malaysian Reserve.

He added that while the market remains small in comparison to new cars, it has been gradually gathering momentum.

“It will continue to play an increasingly important role in the economy moving forward,” he said.

According to the group’s data, the strong V-shaped recovery has been seen since the company resumed business in early May following the Movement Control Order.

“Our used car dealers are also stocking up on their inventories in anticipation of higher demands,” he said.

The platform recently launched its business-to-consumer (B2C) segment to offer a digitalised and transparent process for buying used cars, in conjunction with its flagship store opening.

Cheng said it is part of the company’s effort in solving one of the industry’s biggest pain points, which is the lack of trust in buying used cars.

“It is also in line with Carsome’s goal of building trust and assurance throughout the entire supply chain of the used car industry, from sourcing, financing, retailing to after-sales services.

“We want to create an end-to-end trusted experience for consumers when it comes to buying used cars,” he said.

He said the company has developed the largest transaction network, comprehensive car inspection and grading standards as well as sophisticated data intelligence to help determine the vehicles it makes available to consumers.

“Carsome’s business-to-business has solved a persisting issue for used car dealers when it comes to sourcing inventory.

“With the launch of our B2C segment, we are now creating a new customer acquisition channel for our partner dealers to re-market and sell more cars through our extensive marketing reach,” he said.

Other car manufacturers such as the national car company Proton Holdings Bhd also have been expanding its used car management (UCM) department to further streamline sales and distribution of used cars, noting the new buying patterns which began in July.

The UCM division also intends to set up a dedicated used car portal with an online selling platform to attract buyers, on which potential customers can view the stock remotely and browse the website to receive estimated valuations of the current cars.

In August, the country’s used car segment jumped by 15% year-on-year to 37,880, which was driven by the tax incentives and rising demand for private transportation, according to the Federation of Motor and Credit Companies Association of Malaysia.

The association also noted the possibility of the demand slowing down after September, when the moratorium on loan repayment ends — following solid performances in July and August.