Used car dealers enjoy record sales, spurred by govt incentives

  • Auto
  • Monday, 03 Aug 2020

Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) president Datuk Tony Khor said the surge in demand for used cars at the moment is a scenario that is “simply too good to believe”.

PETALING JAYA: Used car dealers are reporting record-high sales, spurred by the government’s tax incentives and customers downgrading to cheaper vehicles in light of the economic uncertainty created by the Covid-19 pandemic.

Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) president Datuk Tony Khor said the surge in demand for used cars at the moment is a scenario that is “simply too good to believe”.

“Year-on-year, used car sales in July have gone up more than 20%. On a month-on-month basis, sales are up 30% compared with June. Year-on-year June sales jumped more than 100%. This is historic, ” he told StarBiz.

Khor attributed the surge in demand to the spike in new vehicle sales, which has been spurred by the government’s tax exemptions.

“As more people buy new cars, the more they will need to trade-in their old ones, ” he said.

Sales have been so good that Khor said vehicle inspection centre Puspakom has problem coping with the volume.

“A car for sale must first be inspected by Puspakom. The standard operating procedure is that when the vehicle is booked, it will be sent for inspection by the next day.

“But right now, the waiting period has been extended to between five and seven days.”

Khor said some customers have actually cancelled their bookings because the inspection time was just too long a period to wait.

“As a result, some of our dealers have actually lost some business because of that, ” he said.

Under the Short-Term Economic Recovery Plan (Penjana) announced by Prime Minister Tan Sri Muhyiddin Yassin in June, locally-assembled cars will be fully exempted from sales tax while for imported cars, the sales tax will be cut from 10% to 5%, until Dec 31.

The impact was immediate, with vehicle sales rising 5.1% to 44,695 units in June and surging 95% on a month-on-month basis.

At the Malaysian Automotive Association’s (MAA) biannual review last month, president Datuk Aishah Ahmad acknowledged that used car traders are experiencing roaring businesses with more than 100% improvement in sales.

Meanwhile, Khor said another reason for the spike in used car sales was because the Covid-19 pandemic has deterred people from using public transport.

“Many prefer to use their own cars, ” he said.

Additionally, Khor said the six-month moratorium, which ends in September, has also helped to spur sales.

“If the government does not offer any type of incentive after September, we think car sales may be impacted, ” he said.

Recently, national carmaker Proton Holdings Bhd announced that it is expanding its used car management network to capitalise on the surge in demand for used vehicles.

“As Malaysia’s automotive industry starts its recovery from the Covid-19-induced lockdown, new buying patterns are emerging. One development has been the growth in used car sales, which according to the MAA grew by 100% in the first six months of 2020, ” Proton said in a statement.

“Proton saw this as a crucial piece of overall strategy and started to develop a Used Car Management (UCM) department so as to streamline the sales and distribution of used cars in support of new car sales.”

The national carmaker said it aims to have 36 used car outlets nationwide in 2020. The UCM division was started in 2019, with a pilot project consisting of eight outlets located in various dealerships.

New vehicle sales plunged 41.1% to 174,675 units in the first half of 2020, as a result of economic disruptions resulting from the country’s movement control order to curb the spread of the Covid-19 pandemic.

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