Disruptions in the supply of new vehicles may have driven some buyers to the used car market, however the bottleneck in new car supply has also had a knock-on effect on used cars as owners are holding on to their existing vehicles, leading to the reduced supply of used vehicles, said the president of the Federation of Motor and Credit Companies Association of Malaysia, Tony Khor.
The ongoing shortage meant that there is currently a backlog of more than 80,000 new vehicle orders, from which customers have made their booking up to four months ago but have still yet to receive their new vehicles, Khor told The Star.
“So, they have opted to hold on to their current vehicles. This has led to a lack of supply on the used car market,” adding that the demand for used cars increased 8% in the first quarter of 2022 while pricing also increased around 5% for cars that have “less than five years of usage.”
Up to 67% of customers who buy new cars will trade in their existing vehicles “but this is not happening,” said Khor. “The supply shortage had led to a price hike too, as demand has increased. But there is no significant price increase in the consumer market as it’s currently being absorbed by car dealers, so we are getting a smaller profit margin,” Khor continued.
The increased demand was also due to more dealers promoting their products online, which has also bolstered consumer confidence in used cars, he said, adding that transactions are transparent, while some dealers also provide warranties for up to one year.
Demand for used vehicles have also been driven by the special EPF withdrawal that was released in April, with Perodua as well as Japanese brand in particular becoming market favourites, Khor said.
“As we transition back to normal, more people are in need of their own transport and because of the pandemic, people are being careful with their spending, so purchasing a used car is seen as the better bet,” he added.
Ealier this week, transport minister Datuk Seri Wee Ka Siong said that the current sales and service tax (SST) exemption that is set to end on June 30, 2022 could be extended for new vehicles, in order to support the automotive industry that has faced many challenges through the pandemic. First introduced on June 5, 2020, the SST exemption has since been extended three times, firstly to June 30, 2021, then to December 2021, and then the latest one to the end of this month.
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i don’t think Wee should make any comment at all on the SST exemption at this juncture. if it’s true, it’s not his call . if it’s not, he is misleading the public and putting unnecessary pressure on Finance ministry. all in all, speak only what is relevant to your department/ influence.
As with before, he was asked out of the blue and he himself said it was not his call but he gave his PERSONAL opinion on that matter when asked and he did say he will bring it up to the relevant minister/ministry. I think that is the right & proper way to respond rather than not answer at all.