Demand for used cars in third quarter remains brisk

KUALA LUMPUR: A surge in demand for used vehicles has accelerated into the third quarter (Q3) this year with dealers continuing to register a strong sales recovery, driven by the moratorium and government’s tax incentives.

Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) president Datuk Tony Khor said year-on-year (y-o-y) July sales spiked over 25% to 37,800 units, while both August and September registered over 17% y-o-y growth.

“Incentives from the government during the movement control order (MCO), especially the tax exemption and moratorium drove more sales since June.

“We secured sales of 112,400 units for the last three months. The Q3 sales brought the year to date (YTD) figure to circa 280,000 units and we could match the industry’s average yearly sales as demand stays brisk in view of the ongoing tax holiday,“ he told Bernama.

He said the average yearly turnover for used cars in recent years has been hovering around 400,000 units worth over RM15 billion in total, based on an average value of RM40,000 a unit.

Khor, who has been in the industry for over 30 years, now manages 4,325 dealers under the FMCCAM umbrella.

He said used vehicles have become the industry’s hottest commodity as consumers prefer to drive their own car during the Covid-19 pandemic and buy used to save money in the uncertain economic climate.

“The strong demand for used cars during the MCO is for cars of the average value of between RM30,000 and RM40,000.

“Those sellable new ones, the used cars also follow. The number one sellable used car in the market is Perodua Myvi. It is the most (sought after). Myvi is the number one,“ he said, adding that other popular variants include Vios (Toyota), City (Honda), Saga and Persona (Proton).

“Business is brisk, especially for the top sellable low-mileage used cars. For example Myvi might last mere hours and don’t stay on dealer lots for long, thus it seldom appears in the advertisement.

“Normally, Myvi (comes) in and (goes) out quite fast. For the very sellable models we do not need to put too much effort on advertising. The demand for Myvi has also ensured that the model’s resale value remains high,” he said.

According to online used-car data platform iCarData, the depreciation for a five-year old Perodua Myvi 1.5 AV is 33.44%, or just over a third of the original purchase price.

In absolute value, a Perodua Myvi purchased new at RM56,518 without insurance in 2015 could fetch RM37,619.99 on average in 2019.

In comparison, a Proton Iriz 1.6 Premium CVT that cost RM59,731 in 2015 could sell on average for RM30,277.32 in 2019 – a depreciation of 49.31%, or nearly half, the report said.

Khor cautioned that the jubilant used car sales trend may be short-lived and the banner season is likely to end following the expiry of the six-month loan moratorium.

“Although the sales tax exemption is expected to keep demand steady, buying sentiment in Q4 is expected to turn cautious as the moratorium incentive ends.

“Buying mood has slowed down in October. We hope the government could announce another three-month extension of the loan repayment moratorium until Dec 31 to further support the industry during the pandemic,“ he added.