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PETALING JAYA: The used car market is expected to rebound faster than the new vehicle segment this year as more buyers are expected to remain cautious in light of the economic uncertainty created by the Covid pandemic. 19.
The President of the Malaysian Federation of Automobile and Credit Companies (FMCCAM), Datuk Tony Khor (photo 9 below), said the economic uncertainty created by the Covid-19 pandemic will make many people conservative and buy more used cars simply because they are cheaper.
“Since no one knows how long it will take for the economy to recover, many people looking to buy a vehicle will likely turn to a used one because they are cheaper.”
Vehicles are a must, as people need to travel and commute regularly. With the Covid-19 crisis, people may still be afraid or reluctant to travel on public transportation, “he told StarBiz.
He added that many Japanese and German cars these days come with technology that is still relevant even after almost 20 years.
“Therefore, even if the model may be old, this may not deter customers, as its technology is still up to date.”
Citing China, Khor said the Chinese used car market had recovered by almost 80% year-on-year, through April.
It is realistic in the sense that it does not expect sales in the Malaysian used car market to exceed last year’s.
“The country has been blocked since mid-March and saw zero business in April.
Although some companies have already started operating, it will be difficult to compare them with a full year in which there were no commercial interruptions. ”
To address the increase in Covid-19 infections in the country, the government implemented the movement control order (MCO) on March 18.
On May 4, a conditional movement control order (CMCO) was enforced to allow businesses to reopen to regain the economy. The CMCO has been extended until June 9.
Khor said between 40% and 50% of used car companies have already started operating, adding that the transactions have been “aggressive.”
“When the CMCO was announced, used car dealers who could operate immediately cleaned their outlets and cars.
“We have had a good number of reservations in the short period of time and the feedback from the dealers has been encouraging.
“Many of the used car dealers are also implementing good hygiene practices at their facilities, are encouraging social distancing, and are also providing face masks and hand sanitizers to customers.”
Frost & Sullivan Asia Pacific Senior Vice President of Mobility and Associate Partner Vivek Vaidya also agrees that the current economic uncertainty will see increased demand for used cars.
“We also expect demand for used cars to increase during the current crisis. This is because some customers are conservative and buy cheaper, used cars instead of new cars. “
In terms of new car sales, Vivek expects 2020 Total Industry Volume (TIV) to be 20-30% lower than last year.
“The impact of the Covid-19 crisis would be felt in all segments.
“However, the passenger segment, which means that cars that are purchased for the daily commute, are likely to be least affected. Discretionary purchases, that is, cars that are purchased primarily for leisure purposes, are likely. are seriously affected. “
Last month, the Malaysian Automotive Association announced that it was downgrading its 2020 TIV forecast for 400,000 units from 607,000 previously.
The 400,000 unit forecast would represent a 34% contraction from 2019’s 604,287 units. It also marks the first time in 13 years since TIV failed to break the 500,000 unit mark.
According to historical data, the last time vehicle sales failed to exceed the 500,000 unit mark was in 2007, when TIV stood at around 480,000 units. To date, March 2020, sales have fallen 26% to 106,428 units from 143,036 units in the prior corresponding period.
Vivek said raising the MCO is only one step forward to end the crisis.
“The end of the MCO is not the end of the crisis. Therefore, we should see a clear decline in the number of Covid-19 infections or strong indicators that there should be a build-up of massive immunity or that a vaccine should be available.
“There may be some other indicators that the crisis is over.
“But we can observe the customer’s natural behavior only after that.
Until then, we can see an increase in consumer categories, but for the automaker to change decisively, we need stronger indicators than the MCO uprising. “
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