The sales of second-hand cars are predicted to slow down for the remainder of the year, primarily due to the conclusion of the sales tax exemption on March 31. According to Datuk Tony Khor, the President of the Federation of Motor and Credit Companies Association of Malaysia, the sales of used cars during the first quarter of the year were comparable to the same period in the previous year. However, sales began to decline starting from the second quarter.
As reported by TheStar, Khor explained that the strong sales of used cars in the first quarter were influenced by the deadline of March 31, which was set for car manufacturers to deliver models ordered by customers to take advantage of the sales tax exemption under the National Economic Recovery Plan (Penjana). As more individuals purchased new cars, the necessity to trade in their old cars increased.
On average, more than 60% of new car buyers opt to trade in their old cars when purchasing a new one, Khor mentioned. During the second quarter of the current year, the sales of used cars experienced a decline of 10% in comparison to the same period the previous year.
It is anticipated that sales in the third quarter of this year will likely experience a decline in comparison to the same period last year. He attributed this expectation to the extraordinary performance of new car sales in 2022, driven by the sales tax exemption. This high demand for new cars also positively impacted the used car market. Many buyers took advantage of the sales tax exemption and even advanced their purchase decisions to benefit from it.
Due to this, the used car sales in 2023 might not be as robust as they were in the previous year. However, he remains hopeful that sales for the entire year could still reach similar levels as in 2022. Extended warranties offered by used car companies have instilled confidence among potential buyers in opting for older cars.
Even after the expiration of the sales tax exemption, new car sales continue to remain strong, which could potentially translate into positive outcomes for the used car segment.
In July, the Malaysian automotive industry experienced a 28% increase in total car sales, reaching 63,676 units compared to 49,934 units in the same month of the previous year. This rise was attributed to improved automotive supply chains and the fulfillment of bookings for recently launched new models. Year-to-date sales up to July also showed a rise from 381,680 units to 429,807 units compared to the corresponding period in the previous year.
The Malaysian Automotive Association (MAA) expects car sales for August to be slightly higher than those of July due to the introduction of new models and National Day promotional campaigns by car companies.
The MAA recently revised its total industry volume (TIV) forecast for 2023, increasing it to 725,000 units from the initial forecast of 650,000 units. This upward revision is based on a stable economic outlook, the launch of new models, and improvements in the automotive supply chain environment. It’s worth noting that the sales of new cars reached a record high of 720,658 units in the preceding year.
