Less than 400,000 used cars were sold in 2021, but the Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) expects the used car industry to see exponential sales growth this year.
“This year, there will be more than 400,000 units. We are projecting double-digit growth for 2022, 2023 and 2024,” said Datuk Tony Khor, president of FMCCAM to StarBiz. Khor said that this expected growth is led by the popularity of online used car platforms that are convenient to both buyers and sellers, as well as improved buyer sentiment.
He continued: “We predict a compounded annual growth rate of 10% over the next three years. However, in order for used car sales to overtake new car sales, we need to instill confidence in buying a used vehicle.”
Khor said used car buyers must feel safe and protected when buying a used car, similar sentiments shared by those buying new cars. To acheive this, FMCCAM has linked with eAutoGen Capital to launch AutoGen Plus, an extended warranty programme for second-hand vehicles.
Currently, the warranty programme covers mainly the engine and transmission, with coverage provided for up to 10 years. Khor said that with this extended warranty programme, used car dealers are protected from sourcing-associated risks (cars with pre-existing issues, among others).
“With an extended warranty programme now available for used cars, we believe that consumers will be more confident when purchasing older vehicles,” explained Khor.
“Together with aggressive online campaigns by used car dealers, we are optimistic about the outlook of the Malaysian used car segment,” he said.
Khor added that when considering the trend in developed countries, the ratio of used car sales versus new car sales is about to one.
“That means for every new car sold, two used cars are sold. In Malaysia, sales of used cars are at 400,000 units yearly, while for new vehicles it is around 600,000 units annually.”
Khor is optimistic that with time, the sales ratio of used cars versus new vehicles in Malaysia will be comparable to that of other countries. He is also hopeful that new car sales will remain steady for the rest of 2022.
“As more people purchase new cars, the more they will need to trade in their old vehicles,” he said. Of which, the Malaysian Automative Association (MAA) has forecast new vehicle sales to grow 5% to 630,000 units for this year.