SECOND-hand car dealers suffered up to RM80,000 in lost revenue each in the last month as they are not allowed to operate under phase 1 of the national recovery plan.

Industry players say smaller dealerships also lost between RM20,000 and RM30,000 in sales.

Teh Seng Hup, deputy president of the Federation of Motor and Credit Companies Associations of Malaysia (FMCCAM) said second-hand car dealers have to invest more money upfront compared to other sectors and they face huge losses when they are not allowed to operate.

“Car dealers pay thousands of ringgit in rent for the showrooms and have at least 10 to 20 second-hand cars in stock. When you add them all up, the costs can run into millions of ringgit, especially for large second-hand car dealerships,” Teh told The Malaysian Insight.

“On top of having a ready stock of cars, they have to insure them and pay employees’ salaries. All of which add to their expenses.”

He said some second-hand car dealers took loans from banks but face cash flow problems from not being allowed to operate.

Apart from money woes, the long period of no activity is also making them worried about the physical security of their dealerships and cars.

“A beauty salon in Johor was broken into because it was closed for a long time. We are worried that valuable car parts could get stolen and we won’t even know about it.

“The cars cannot be left idle for too long. Their engines need to be started every now and then but given the movement restrictions, this is not possible.”

Teh added that although the auto industry is allowed to operate under phase 2 of the recovery plan in states that have transitioned, it has not been the case.

“When Perak transitioned to phase 2, local car dealers were still not allowed to open. In Pahang, dealers have received a notice informing them that they will only be allowed to open in phase 3.

“We find this strange and so we have written to the ministry to better understand the situation. If we have to wait until phase 3 to operate, we will have a hard time making ends meet.”

Teh said thousands of employees working in car dealerships nationwide have been affected by the closure.

He said a second-hand car dealer typically has three to five employees, and sees around five to six customers a day.

These numbers should pose no problems to implementing social distancing measures and other standard operating procedures (SOP), he added.

Larger dealerships can adopt a shift system and ask their salesperson to work away from the premises, Teh added.

Though there has not been a wave of closures in the auto dealership sector, Teh said he has heard of some who are planning to venture into other businesses.

Meanwhile, FMCCAM president Tony Khor said he has no updates from the Ministry of International Trade and Industry, which earlier promised to help the auto industry resume work soon.

“We wrote to the ministry and put forth two suggestions – limiting business hours and reducing onsite staff. We received a positive response that they will look into the matter but we have not received an update since.”

Khor said some members have turned to ezAuto, an online car sales platform, to conduct sales and transactions. By using the online platform, he said business has improved by up to 30%.

“Our costs are very high. If we are still unable to open soon, many of us will not be able to hold on. I hope the government can understand our predicament.”

The Malaysian Association of Automobile Manufacturers said that since the full lockdown on June 1, production, distribution and sales in the automobile sector have been severely impacted.

The association asked that the government reuse the SOP in the first movement control order in March last year when car dealers were allowed to open two to three days a week to process, receive and store inventory. – August 3, 2021.