A MOTORCYCLE sales boom that made Malaysia the 12th largest market has gone bust after 18 months on a weakening gig industry and ringgit, dealers said

The 18-month motorcycle sales boom has burst with dealers now projecting a 10-20% sales drop for the two-wheeler market by the end of the year.

They said the boom, driven by demand from the gig economy – food delivery and courier services – has slowed down.

The declining ringgit had also increased prices and they said that had resulted in slowing demand as dealers were forced to increase prices.

They said banks were also tightening loan conditions as most borrowers – from the B40 group – were struggling with payments.

According to figures of the Malaysian Motorcycle and Scooter Dealers Association, sales in the first nine months of this year have dropped dramatically against the corresponding period last year, with the decline starting in the second half of the year.

Last year turned out to be the best year for motorcycle sales with 671,386 units sold, making Malaysia the 12th largest motorcycle market in the world.

This year started strongly with sales booming in the first quarter at 167,549 units (+21.6%) but beginning April, the year-on-year comparison became largely negative, eroding the advantage gained in the first quarter.

Following a 37.4% fall reported in June, the first half of 2023 ended with 293,924 sales (-5.9%).

This trend, dealers said, will result in a drop in total sales by up to 20% by the end of the year.

The association’s president, Wee Hong, gave two reasons for the drop – the ailing economy and difficulties in getting a bank loan.

Wee told The Malaysian Insight the continued failure of the national economy to recover from its Covid-19 pandemic slump was the number one reason.

“The state of the economy is the main factor. The majority of workers in the B40 group rely on the motorcycle for work.

“It’s the transport of choice. The gig industry, particularly the food delivery and courier services, is on the wane and therefore the demand for motorcycles has also declined,” he said.

Wee said the struggling economy, coupled with rising inflation, have made cost of living increasingly difficult for most people in that income category.

“With the shrinking ringgit, many find it difficult to make their loan repayments.”

The repercussions, he said, is that banks being wary of the increasing number of defaults have imposed stricter conditions on loans.

“In the boom time last year, there were often shortages of supply. Now the supply is sufficient.

“Nearly all motorcycle shops are stocked with a variety of models but buyers are few.”

Highlighting the economic woes, Muar Motorcycle Dealers Association chairman Cheong Beng Chio said the Johor town they are based in has many furniture factories that have gone out of business.

“Many in Muar are unemployed. When workers lose their jobs, they no longer need to buy motorcycles for transport, which in turn leads to a drop in sales.”

Cheong said the drop had been significant in the past two to three months.

It was 20% last month, he said.

He said even when dealers offer huge discounts to perk up sales, there were very few takers.

“People simply do not have the purchasing power.”

A quiet market

Johor Motorcycle and Scooter Trader Association chairman Chen Kim Hock said it’s a mistake to compare last year’s boom and this year’s decline to determine the drop in motorcycle sales.

“The situation before and after the Covid-19 pandemic is different. Before the pandemic, the number of new motorcycles sold monthly was roughly between 55,000 and 58,000.

“There was a shortage of motorcycles in the market after the pandemic, which saw the closure of the national border, restrictions of movement and forced closure of factories,” he said.

Chen also said Vietnamese workers in Singapore couldn’t get to Johor during the lockdowns to buy new “cheaper” motorcycles.

He said it was only when the border restrictions were lifted on April 1 last year, that there was a rush by the Vietnamese to buy motorcycles in Johor.

Chen also said the government’s decision to allow Employee Provident Fund account holders to withdraw up to RM10,000 from their account for the sales boom last year.

“The decline in motorcycle sales is just a return to the situation before the pandemic, before March 2020.”

Chen, however, admitted sales have indeed decreased more in the past two months.

The main reason, he said, is that the market “is very quiet”.

“People just don’t have any extra money to spend, and the number of people who can’t repay their loans is also increasing.

“This had resulted in bad debts increasing, which in turn caused banks to tighten their loan conditions.” – October 23, 2023.