Sales Of Used Cars Expected To Moderate

Used car sales are expected to slow for the rest of the year, owing to the expiration of the sales tax exemption on March 31, StarBiz reported.

Datuk Tony Khor, president of the Federation of Motor and Credit Companies Association of Malaysia, stated that used car sales in the first quarter of the year were comparable to the previous corresponding period, but began to decline in the second quarter. “Used car sales in the first quarter of this year were strong, as March 31 was the deadline for carmakers to deliver units ordered by customers so as to enjoy the sales tax exemption under the National Economic Recovery Plan or Penjana. “As more people purchase new cars, they will need to trade in their old vehicles,” he told StarBiz.

On average, more than 60% of new car buyers will trade in their old ones, Khor noted. “In the second quarter of this year, sales of used cars were down by 10% year-on-year,” he said. According to Khor, sales in the third quarter of this year will most likely be lower than in the same period last year.

“Because of the sales tax exemption, 2022 was a record-breaking year in terms of new car sales.

“That also translated into really good sales for the used car segment.

“Many buyers also brought forward their purchases last year to capitalise on the sales tax exemption.

“Therefore, we do not expect sales in 2023 to be as robust as last year.” Nonetheless, Khor believes that used car sales in 2023 will be comparable to last year's levels.

"Many used car companies are offering extended warranties for cars, which has given potential customers confidence to opt for older vehicles." Furthermore, despite the expiration of the sales tax exemption, new vehicle sales have remained strong, a trend that, according to Khor, will likely translate into the used vehicle segment. Total vehicle sales increased 28% to 63,676 units in July from 49,934 units the previous year, owing to the normalisation of automotive supply chains and the fulfilment of bookings received for recent model launches. The Malaysian Automotive Association (MAA) said last week that total industry volume (TIV) for July 2023 was 1.7% higher than in June 2023 (62,593 units), as vehicle sales continued to rise.

Total vehicle sales in July increased to 429,807 units, up from 381,680 units in the previous corresponding period. The MAA predicts that vehicle sales will be slightly higher this month than they were in July.