SHORTAGES of semiconductors and other components hampering carmakers worldwide have been a boon for used car traders. 

The long wait for new cars has driven the demand for readily available cars, according to industry experts.

The Federation of Motor and Credit Companies Association (Kuala Lumpur and Selangor) deputy president Dave Lim told The Malaysian Insight that this in turn also poses a dilemma for used car traders – they don’t have enough cars to sell.

Lim said this is because buyers intending to get new cars are in no hurry to trade in their current vehicles due to the long wait for their new ones.

“It’s only when they get their new cars will they sell their old ones.”

Lim said the shortage of used cars started six months ago when the economic sector fully reopened after long-lasting Covid-19 restrictions. 

He also said car owners are holding on to their old cars while on the waitlist as they are not keen on taking public transport.

“They would rather hang on to what they have than take public transport. That causes the shortage.”

Lim said the more popular models in the used car market are Honda, Toyota and Proton, whose prices have increased by between 10% and 15%. 

He said the situation could persist until the end of this year. 

Federation Motor and Credit Companies Associations of Malaysia (FMCCAM) president Tony Khor said apart from those models, cars that are less than five years old are also in demand.

“In general, used car prices have increased by 3% to 5% but those that are three or four years old have gone up even more, by 8%,” he said.

“Used cars below five years old are in high demand in many parts of the country, but in some suburban areas, older, well-maintained cars are still popular.” 

Like Lim, Khor also thinks the current situation will persist until year-end.

He said he believes the industry will be back to normal after that. 

FMCCAM deputy president Teh Seng Hap said the demand for used cars had increased by 20% in the first half of the year.

“Used car dealers have seen their normal stock of 50 cars down by 50%. Many are now left with about 20 cars, with replenishment of stock (going) slow.”

He said the usual scenario for used car dealers these days is to see potential buyers walk away without making any purchases.

“They (buyers) come looking for used cars, but since the selection of models is small all (dealers) see is business slipping away.” 

Khor said the weak ringgit coupled with the rising prices of raw materials could cause the prices of new cars to go up next year.

“Raw materials used to manufacture cars are traded in US dollars. If the ringgit continues to depreciate and raw materials keep rising in price, the cost of new cars will definitely go up.

“If the appreciation range is too high, manufacturers will definitely pass the extra costs to the consumers,” he said. – June 25, 2022.