Just before the Pakatan government cane into power, the previous government had handed a golden platter to 36 Malaysians to become used car Approved Permit (AP) holders via MITI.
The 36 new AP holders were first brought to light after www.dsf.my broke the story in March this year.
This was met with a lot of negative press and some harsh emails from the new used car importers who did not like the idea of anybody messing with their ‘golden goose’.
Well, it seems like their ‘golden goose’ is sick and some of them are now having difficulties selling their gray imported vehicles. Our investigations these past few months have reveled some interesting information and due to lack of a full legal team at our backing we have to refrain from sharing all the obtained information and here is what we can share with you.
There are 6 reasons why some of these new AP holders are struggling to sell their current stock of imported vehicles.
- They got into in business thinking this was going to be easy to do with high profit margins. With a market contraction and a fall in the Malaysian Ringgit, their stock costs more now when landed and being new to the business they did not get good wholesale purchase pricing on their imported used cars. Thus, they cannot compete on selling price with the established AP holders who have dropped their prices to squeeze these new guys out.
- Established AP holders have a line of credit with overseas suppliers and so their cost of trading in used cars is lower. The new AP holder has to borrow money, pay interest and has holding costs.
- The long time AP holder has his showroom paid for. This means he can further drop his price to ‘push’ the new AP holder into a corner.
- The new AP holders thought they could ‘play’ with the tax system. Now with the Pakatan government this is not possible and their landed cost is not comparable with established AP holders who have old stock sitting and aging ready to be sold at a better lower price.
- Established AP holders are now willing to take in the stock of new AP holders…at a very discounted price to ‘help’ them clear their stock before end December or else the new AP holders will NOT get their new stock of AP’s next year.
- New AP holders who have ample cash in bank will hold their stock until 2020 and then try and get a lower tax (as the stock has aged) to get a better cost price and then sell lower without making losses. Meanwhile, they have to accept lower prices.
Meanwhile, this only means that established AP holders are working together to slowly eliminate some of the new AP holders and MITI (Ministry of International Trade and Industry) only needs to keep auditing them to check and make sure they are NOT selling their AP’s and stocks to used car dealers.
