USED car dealers, who said they have lost RM400 million in revenue in the past three months, are hopeful that they can rebuild as more states enter phase 2 of the national recovery plan.

The decline in sales for new and used vehicles was due to the strict lockdowns caused by a spike in cases from July to August, they told The Malaysian Insight.

The Department of Statistics also reported car dealerships as the worst performing retail sub-sector in July, when it recorded negative 85.6% growth.

Federation of Motor and Credit Companies Association of Malaysia president Tony Khor said sales nosedived following the lockdown in May. All regions are now in phase 2 or above with Selangor, Kuala Lumpur and Putrajaya the last to enter this phase on September 10.

“From January up to May our sales were good. We made profits of up to 18%, but since June we have lost revenue because of the lockdowns, forcing dealers to close shop. The authorities (to process car sales) were also not operating.”

Khor said that the association currently has 4,556 members, which include new and used car dealers, and credit companies that provide hire purchase agreements.

They have about 90,000 vehicles worth RM3 billion in their collective inventory.

“The monthly depreciation of the vehicles is 0.5%. Some dealers are holding a few units, but others could be holding more than 100 units.

Khor said they have yet to count how many dealers have closed down.

“Once interstate travel is allowed, we plan to do a survey on how many dealers are still operating. It should be in the next couple of months.”

Khor said that despite the eased movement restrictions in more states, not many used car dealers are upbeat about restarting.

“Some don’t want to open, because they are still concerned about the pandemic and other variants of viruses.

“We have also urged all our members to get vaccinated.”

However, reopening has also brought a new set of problems. After several months of neglect, some cars are not in good condition.

“The cars don’t start and batteries have problems, besides other issues, because the cars have been idle for three months.

“Now that we are allowed to open, we find more problems and losses.”

Despite the setbacks, Khor is optimistic that sales will pick up in the fourth quarter of the year if there are no further lockdowns.

The government has pledged that states cannot revert back to a more restrictive phase of the national recovery plan, as the country prepares for Covid-19 to become endemic.

“If there are no further lockdowns, we might be able to achieve last year’s target of selling more than 400,000 vehicles,” said Khor.

Malaysian Automotive Association (MAA) president Aishah Ahmad predicts a surge in sales from this month.

She said MAA members started opening their showrooms towards the end of August after fulfilling the conditions set by the government in terms of full vaccination status for employees and customers.

“This (recovery) can occur as vaccinated potential customers are allowed to visit showrooms.

“Our production plants mostly located in the Klang Valley are also able to operate at full capacity if their employees are fully vaccinated.”

She said that they expect sales for August to be higher than July this year, following the re-opening of businesses in mid-August.

Aishah also estimated that the auto industry has easily lost billions of ringgit each month during the pandemic.

“To give an overall perspective: average sales or total industry volume is usually between 45,000 and 50,000 units a month.

“Assuming an estimated of RM100,000 per vehicle, the loss in revenue could easily come to RM5 billion a month and this is only from sales of vehicles in the domestic market.”

MAA members have also lost much in terms of revenue from exports of vehicles and components, and sales of spare parts locally.

The pandemic has also affected the supply chain, such as microchip shortages for cars of certain makes, she added.

MAA has appealed to the government to extend the 100% sales tax exemption for complete knock down passenger cars and the 50% tax on complete built up passenger cars to June 30, 2022.

The exemptions, under the Pemerkasa Plus stimulus package, will expire on December 31. 

Since automotive plants, distribution centres and sales showrooms were closed during the MCO from June 1 to early August, the tax exemptions were redundant.

“Consumers also lose out on this benefit as they could not buy vehicles during the lockdown months,” Aishah said. – September 13, 2021.