Following the news that the sales of used cars are witnessing growth during conditional movement control order (CMCO) in Malaysia;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“Malaysia does not have a robust public transportation infrastructure and a large number of people rely on personal mobility. It is evident from the fact that the motorization rate i.e., the number of vehicles per thousand population in Malaysia is higher than all countries in Southeast Asia (SEA) – except Brunei and is also higher than China and India.

“Malaysia has a sizeable used car market. However, similar to most markets in the region, the market is highly fragmented. Some recent entrants in the used car market offer end-to-end solutions for online vehicle buying and selling, and they are trying to reduce the time that it takes for a typical used car sale transaction. Such options, combined with hygiene and safety measures by used vehicle dealers, could have contributed to the reported increase in sales of used vehicles even during the CMCO in Malaysia.

“The used car market in the entire Southeast Asia presents potential opportunities as well as scope of improvement. The region’s market structure is similar to the structure of China’s used vehicle market of yesteryears. Like China, the customers in SEA are also pocket-conscious and like to see the vehicles before they purchase. Market players in SEA should consider China as the benchmark, especially in terms of digitization of the used vehicle market.

“Within the region, Indonesia used car market presents significant potential. It offers a large geography and population, fragmented market, high scope of digitization, suitable customer segment and increasing penetration of smartphones. Moreover, the market has demonstrated high acceptance of shared mobility and related services and players like Gojek have witnessed high growth. While such services will take a short-term hit, they are expected to eventually pick up and contribute to the used vehicle sales. In addition, in Southeast Asia, a typical 5 to 7 year old car remains in decent condition as there are good drivers and people take care of their vehicles. All these factors, combined with high potential of growth for used car segment after the crisis is over, make Indonesia a lucrative market for used cars business. While Indonesia presents a higher potential, Malaysia used car market is not too far behind.

“COVID-19 will certainly have an impact on the consumer expectations, behavior as well as preferences. In post-COVID period, concerns regarding the safety and hygiene will drive customers away from public transportation and shared mobility – especially ridesharing. As a result, customers are likely to opt for personal mobility and the sales of both new and used vehicles should pick up once the outbreak is over. Since affordability is a key factor among a large share of users of public transportation and shared mobility, used car market is expected to witness faster recovery and high growth after the pandemic is over.”