Storyline
- Middle-Class Expansion: Rising middle-class income drives increased car ownership and demand for pre-owned vehicles.
- Digital Surge: Growing prevalence of online used car platforms boosts sales and enhances accessibility.
- Strategic Pandemic Support: Moratorium on car loans sustains the used car industry during the pandemic.
- Future Growth: Anticipated 8.5% (2027) CAGR as Malaysia's middle class expands and digital trends persist.
- As per Ken Research, the Malaysia Used Car Market has undergone a robust growth, facilitated by the expanding vehicle ownership among the middle class, improved availability of financing options, and the flourishing trade-in culture
1. Driving Growth Factors in Malaysia's Thriving Used Car Market
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The Malaysia Used Car Market has experienced growth driven by factors like expanding vehicle ownership within the middle class, increased availability of financing options, and a growing trade-in culture. As the economy flourishes and the middle-class strata grows, more Malaysians are embracing car ownership, with middle-income earners of MYR 4,851 to MYR 10,970 per month investing in pre-owned vehicles. Moreover, the market is taking advantage of improved financing options, as banks and financial institutions offer specialized loans and flexible schemes tailored for used cars, enhancing accessibility for potential buyers.
2. Kuala Lumpur and Selangor: Driving Force Behind Malaysia's Used Car Demand
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Kuala Lumpur and Selangor are the leaders in the road traffic landscape in Malaysia, resulting in a robust demand for used cars. The Klang Valley, encompassing these regions, holds a major share of the country's used car sales, exceeding 60%. This dominance is due to the urban population's high disposable income, the region's economic importance, and a concentration of dealerships and used car exchanges. Moreover, key commercial centers like Kuala Lumpur, Selangor, Melaka, and Johor, along with major tourism hubs like Kuala Lumpur, Penang, and Sarawak, contribute to increased road traffic and further fuel the demand for pre-owned vehicles.
3. Strategic Moratorium Boosts Sustainability of Malaysia's Used Car Industry Amid Pandemic
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The implementation of a moratorium on car loans during the pandemic has played a strategic role in enhancing the sustainability of the used car business in Malaysia. This measure, announced under the National Economic Recovery Plan, also known as Penjana, has provided critical support to used car dealerships and financial institutions. These entities provide streamlined loan applications, rapid approvals, and comprehensive assistance, ensuring a smooth financing experience for customers. Moreover, most banks in Malaysia extend financing of up to 90% for Malaysian citizens and 70% for foreigners looking to purchase used cars. This intervention has effectively provided benefit in maintaining the used car industry's stability throughout the pandemic.
4. Market Set for 8.5% CAGR Amidst Middle-Class Expansion and Digital Surge
The Malaysia Used Car Market is anticipated to offer a robust growth rate with a CAGR of 8.5% from 2022 to 2027. This expansion is due to the increasing middle-class segment and the growing prevalence of online used car platforms. The middle-class population, accounting for 37.2% of total household income in 2019, is projected to further expand, showcasing a heightened demand for pre-owned vehicles. The increase in online auto-classified platforms and consumer preference for digital avenues are expected to bolster the used car sales growth. Moreover, FMCCAM's strategic initiatives, including the introduction of a new online marketplace and collaboration with used car financiers from Japan, China, and Taiwan, are expected to contribute to the increasing sales of used cars in the country.
Conclusion
As per Ken Research, the Malaysia Used Car Market has undergone a robust growth, facilitated by the expanding vehicle ownership among the middle class, improved availability of financing options, and the flourishing trade-in culture. As the middle-income group's economic capacity widens, an increasing number of Malaysians are going for car ownership, with an increased preference for pre-owned vehicles.
The market's accessibility has been further enhanced by the presence of diverse financing options offered by banks and financial institutions, catering specifically to used car purchases. Moreover, Kuala Lumpur and Selangor stand as major drivers of the market due to their significant road traffic contribution, showcasing the region's economic importance and urban population's disposable income. As the market evolves, strategies such as the introduction of extended warranty programs, OEM-certified car labs, and the rise of used EVs are shaping the landscape and broadening opportunities.
Moreover, the government's support, including the moratorium on car loans, has bolstered the market's resilience during the pandemic, ensuring the continued vibrancy of the used car industry in Malaysia.
