We share a possible solution for the new and used car industry.
The Malaysian automotive industry is looking quite bleak for the coming months as business owners and their employees are facing a definite global economic slowdown. Meanwhile new and used car dealers in Malaysia need to keep their business moving and customers will be scarce from the private sector as job cuts and business closures will take place in the coming months……but not for the already bloated government sector (which means there is one government servant for every 19.37 Malaysian).
Think about it. With the recent government handout to all government servants and pensioners who already have guaranteed monthly income and guaranteed jobs, they now have access cash in their bank accounts.
Yes, the cash handouts were also allocated to the households, single adults and students, but this is a one-time payment to make it easier for them to buy food and necessities during the lockdown period.
What The Government Did
There were cash handouts to the B40 (households earning less than RM4,000) and M40 (households earning between RM4,001-RM8,000).
Every B40 household got RM1,600 and every M40 household got RM1,000. Singles earning less than RM2,000 got RM800 and those earning between RM2,001 and RM4,000 got RM500. Students from tertiary education got RM200. Pensioners and civil servants of Grade 56 (whose total remuneration is about RM15,000 per month) and below got RM500 each (which most Malaysians thought was totally unnecessary as their salaries are still running during the lockdown).
During the lockdown, most government departments were closed and these employees were staying at home and saving on cost of going to work, eating out and so on. This means, they all should have spare cash in their bank accounts.
They now the ability to take on a new car loan or maybe a used car loan. Plus, being a government employee they get a better car loan interest rates from the national cars which will spur the sales of the national car brands.
Bargaining Power
The bargaining power with the used car market will now be better as used car dealers will need to move their sitting stock and buyers have the upper hand to push prices down.
It is a win win situation if you are a government employee or a pensioner right now. In 2019, the number of civil servants (government employee) in Malaysia stood at about 1.7 million Malaysians. This is hefty number of people with added cash in the accounts and with guaranteed future income and they can start helping the Malaysian car industry.
Malaysian new and used car dealers should be emphasizing their marketing plans to get them to change their current old cars.
