Khor said that on average, more than 60% of new car buyers will trade in their old ones.
PETALING JAYA: Sales of used cars are expected to moderate for the rest of the year, mainly due to the expiry of the sales tax exemption on March 31.
Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor said used car sales in the first quarter of the year was on par with levels in the previous corresponding period, but had started to decline from the second quarter.
“Used car sales in the first quarter of this year were strong, as March 31 was the deadline for carmakers to deliver units ordered by customers so as to enjoy the sales tax exemption under the National Economic Recovery Plan or Penjana.
“As more people purchase new cars, they will need to trade in their old vehicles,” he told StarBiz.
On average, more than 60% of new car buyers will trade in their old ones, Khor noted.
“In the second quarter of this year, sales of used cars were down by 10% year-on-year,” he said.
Khor said sales for the third quarter of this year will likely be lower compared with the same period last year.
“Because of the sales tax exemption, 2022 was a record-breaking year in terms of new car sales.
“That also translated into really good sales for the used car segment.
“Many buyers also brought forward their purchases last year to capitalise on the sales tax exemption.
“Therefore, we do not expect sales in 2023 to be as robust as last year.”
Nevertheless, Khor is optimistic that used car sales for 2023 could potentially match the levels achieved last year.
“Many used car companies are offering extended warranties for cars and this has created confidence among potential customers to opt for older vehicles.”
Furthermore, despite the expiry of the sales tax exemption, sales of new vehicles have remained strong, a trend which will likely translate into the used vehicle segment, according to Khor.
Total vehicle sales rose 28% to 63,676 units in July from 49,934 units last year, due to normalisation of the automotive supply chains and fulfilment of bookings received for new model launches recently.
In a statement last week, the Malaysian Automotive Association (MAA) said total industry volume (TIV) for July 2023 was 1.7% higher than June 2023 (which was at 62,593 units), as vehicle sales continued with upward momentum.
Year-to-date July, total vehicle sales rose to 429,807 units from 381,680 units in the previous corresponding period.
On the outlook for this month, the MAA said vehicle sales are expected to be slightly higher than July’s level.
“This is due to the introduction of a few new models as well as National Day promotional campaigns by some car companies,” it said.
Last month, the MAA revised its TIV forecast for 2023 upwards to 725,000 units from 650,000 units in January, on the back of a stable economic outlook, new model launches and further improvement in the automotive industry supply chain environment.
Sales of new vehicles hit a record high of 720,658 units last year.
