Do not be alarmed with this figure until you finish reading this article.
Looking at the figure it seems very scary but it must be noted that the sale of homes in Malaysia also fell during this period and it is perfectly understandable as Malaysia was in a pandemic lockdown. Car showrooms were closed, Road Transport Department was closed and Puspakom was also closed. So, it was virtually impossible to buy a new car during this time.
Malaysia and ASEAN is not isolated in this issue as the British automotive sector has already lost £8 billion as a result of lockdown, with new-car registrations down 97.3 per cent in April this year. The British automotive agency SMMT claims there is pent-up customer demand that will be fulfilled in the coming months.
The recent re-opening of the Jabatan Pengangkutan Jalanraya (JPJ) Malaysia after lockdown saw a surge in activity from used car dealers, new car dealers and also gray market importers who were trying very hard to clear the pre-lockdown car sales before some of these buyers decide not to take up their newly purchased cars or before their loans get re-examined by the financial institutions.
Wait for next months’ sales figure and just like the other Asian countries who have opened up, our new cars sales figure will move upwards very fast. Yes, it will not return to 2019 figures and that should be perfectly understandable but the move upwards will continue as the month’s progress and our economy rebuilds itself.
Just like the financial crisis of 1997 to 1999, the monetary and financial sector front Bank Negara loosened monetary policy by reducing interest rates gradually from 11 percent in July 1998 to 6 percent in May 1999 and 3 percent in December 1999. This pushed the economy back and to automotive sector bounced back and was the strongest in the region for many years.
Now the Malaysian automotive business does not look good for the near future and it is going to be tough for new players to stay in business in the next few months to a year. Meanwhile the established car dealers (new, used and grey import) who have already paid up the showroom setup costs and have ample floor stocking facilities from the banks might be able to ‘weather’ this coming economic storm.
For the used car association in Malaysian the situation is a little different as it is led by big established players who have been in the business for decades and they are now joining forces to ensure their stock values do not plummet. It is also like a cartel working to ensure their survival against the odds. The used and new car market movement downwards is a global trend and the used car big boys, just like the property players, cannot change this trend.
