Perodua is latest to go into used car business

By THE STAR | 2 November 2015

OSAKA: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) is expanding into the retail sales segment for pre-owned vehicles (POV) and improving its after-sales service to cushion itself from the weaker ringgit and challenging outlook in the automotive sector.

Speaking to reporters at the sideline of 2015 Tokyo Motor Show, Perodua president and chief executive officer Datuk Aminar Rashid Salleh said the company was currently facing margin compression from new car sales due to the weaker ringgit and higher campaign and promotion expenses.

He explained that Perodua was in the midst of improving its after-sales service as well as expanding into retail sales for used cars from its current wholesale-only model.

“The original plan was to launch the company’s POV branch in the fourth quarter of this year, but we hope to have the first POV in the Klang Valley by next year,” he said.

He explained that the POV initiates would help Perodua in a way to control the resale value of its cars and to provide an alternative for customers who can’t afford new cars.

POV model is basically taking in used cars as trade-ins and later refurbished for resale with warranty of between six to 12 months given by Perodua.

Aminar said that up to September this year, the company has received about 3,500 trade-ins units and it targeted to collect 4,800 units by year-end.

He noted that Perodua would only use cars that are up to seven years old for its POV programme as older cars may not be economically viable.

On Perodua’s after sales, Aminar said that regardless of the economic situation, its existing customers would still need to service their cars.

“Our services are within an affordable range of only over RM100 and we are developing several packages to bring back our lost customers,” he said.

About 40% of Perodua’s profit is derived from its after-sales services.

Although Perodua posted its worst sales performance in September of some 14,500 units, Aminar said Perodua was confident of achieving new car sales of 208,000 units this year.

Up to September, he said the company had sold 157,527 units, 12% higher than the 140,317 units recorded in the same period last year backed by strong Perodua Axia sales.

For this year alone up to September, Perodua sold 76,107 Axia units in Malaysia. The model was introduced in September last year. Sales for Perodua’s face lifted Myvi and Alza MPV declined to 52,560 units and 28,841 units from 65,245 and 43,014 units in the same period last year respectively.

Aminar said Perodua was targeting to sell 105,000 Axia units this year.

“We expect sales for new vehicles in October to be about 17,000 units, which was our average monthly sales previously,” Aminar said.

When asked if Perodua was going to increase its car prices amid the weaker ringgit environment, Aminar said the company is monitoring the possibility for such move.

“We are studying the situation very closely, because I have to admit our costs have been increasing. If possible we want to avoid such a move until a point when we are no longer able to absorb the costs,” he said.

“The stronger US dollar and yen have impacted 2% to 3% of our bottom line three months ago, and now it has gone up to 5%,” Aminar added.

He said the hike in Axia G’s prices by about RM1,000 in October was not because of foreign exchange but because the previous price was an introductory price for the variant.

Aminar said Perodua was also expanding its research and development division that would include designing its own car.