Car loans moratorium and other incentives under Penjana have helped sustain used cars businesses
by RAHIMI YUNUS / pic by RAZAK GHAZALI
THE used car segment is on track to cross a two-decade high of sales volume attributable to car loan moratorium and sales tax exemption.
Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor Chong Boon said there was a surge in demand for used cars in the third quarter of 2020.
He said the momentum continued into the beginning of 2021 through to the Chinese New Year period.
“Looking at latest sales performances, we are expecting sales figures for March 2021 to be the highest since 2002 or 20 years ago. Year-to-year comparison, the total sales figures for used cars will pass the 400,000 marks,” Khor told The Malaysian Reserve.
He said the moratorium on car loans and other incentives announced by the government under the short-term National Economic Recovery Plan, also known as Penjana, have helped sustain used cars businesses.
He further said the most popular secondhand cars at present are that of entry-level passenger vehicles such as Proton and Perodua cars, based on transaction data from ezAuto Asia Sdn Bhd’s sales portal.
Besides that, he said second-hand middle-class passenger vehicles, including Toyota and Honda cars, have gained interest among car buyers following various government incentives to spur the automotive industry.
The sales tax exemption and introduction of new models such as Proton X70 and X50, he said, have boosted the volume of new vehicles, which in turn generated more trade-in vehicles into the used car market.
This contributed to the increase in used cars sales as Malaysian car buyers are provided with more choices of models and cars tobuy.
He also attributed the increase in sales of used vehicles to the accelerated digitalisation of automotive e-commerce trading platforms.
“While Covid-19 may have ‘distorted’ our used cars market, it has also shifted how used cars at auction are viewed and used. We are witnessing good responses, good speed in adapting to digital retailing, and sheer determination and hard work from used car dealers,” Khor added.
Going forward, he said the most successful used cars dealers will be those that continue to embrace digitalisation and offer a blended online and offline experience.
In December last year, the government agreed to extend the sales tax exemption for passenger cars for six more months until June 30, 2021, as part of Penjana.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz has approved the sales tax extension, which grants 100% tax exemption to completely knocked-down passenger cars and 50% to completely built-up units, including imported used vehicles.
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.