From Rust to Robust: How the Malaysian Government Fuels Growth in the Automotive Aftermarket Service Sector? – Ken Research

 The Malaysia after-sales service market recorded a positive CAGR of ~3% during the period 2015-2020. However, the market witnessed a decline in the demand for aftermarket services during the 2nd quarter of 2020 owing to the COVID-19 situation. During that time, the Malaysian market witnessed a decline in new car & used car sales in 2020 which also impacted the automotive aftermarket service sector.

But the interesting part is Used car sales in Malaysia were steady despite the pandemic, as it has deterred people from using public transport leading to higher demand for post-warranty service from multi-brand workshops.
Here, we have shed light on the government plans that have been helping the Malaysian automotive aftermarket service industry.

1. Surging Demand for Used Cars in Malaysia Leading to Growth in Service Requirement industry in Malaysia

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1.2. Moreover, Growing Car Parc coupled with the Penetration of Companies in the Automotive Aftermarket are also creating the demand for aftermarket services in the country

2. However, COVID-19 impacted the sales of new cars which also affected the growth of the Automotive Aftermarket Service Industry in Malaysia

3. But, National Automotive Policy (NAP) & National Roadmap for Automotive Aftermarket (NRAA) are focusing to Strengthen the Automotive Industry in Malaysia and will enable to grow positively in the future

Some of the Intelligence Curated by Ken Research in Automotive Aftermarket Service Space:

1. Egypt Automotive Aftermarket Service Industry Outlook to 2027: Driven by burgeoning population, vehicle sales growth and government moves to combat auto emissions”
2. UAE Automotive Aftermarket Service Industry Outlook to 2026: Driven by increasing number of startups and consumers shifting preference towards online and organized sector
3. Indonesia Automotive Aftermarket Service Market Outlook to 2026: Influx of new players and car variants from abroad are contributing to the growth of automotive aftermarket service industry in Indonesia
4. KSA EV Charging Equipment Market Outlook to 2027F Driven by Government Initiatives, Demand for Eco-friendly Transportation and Entry of New Brands in the market

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Malaysia Automotive Market

Malaysia Unorganized Automotive Aftermarket Services Market Poised to register a CAGR of over 11% during the period 2020-25. Will the projections justify growth?

 91% of the market is captured by unorganized independent garages which offer personal touch, flexibility, convenience and economic services to the customer: Ken Research

1. Low Service Cost Leading to Higher Preference of Multi Brand Car Service Centers

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When it comes to authorized service car centers, high spare part cost is charged due to genuineness of parts & high labour cost. Extra services will be invariably charged separately for labour hours whereas, Multi Brand Car Service centres avail comparatively 40% less cost. Moreover, High level of customization & personal service is also available & owners can request a particular mechanic to work on car & supervise the operation.

2. Marketing Strategies & targeting a specific group Leading to Growth of OEM/Authorized Service Centers.

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Over 50% of the car parc in Malaysia are in the age group of 1-5 years, which leads to high demand for the authorized after sales workshop in Malaysia. Moreover, extended 2 year warranty for few brands in Malaysia is leading to an increased demand for the after sales services from an authorized service center. Authorized after sales workshops in Malaysia are offering ~20-30% discount on their services to attract the post warranty customers who generally prefer the multi brand workshops. Authorized after sales workshops providing additional value-added services and warranty on the serviced to retain their customers. All in all, higher transparency in authorized workshops is attracting the customers also after post warranty.

3. Organized Multi Brand Service Centers to Witness Increasing Market Share with Entrance of New Players.

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Malaysia aftermarket service market anticipated to record a CAGR of over 3% during the period 2020-2025. The market shall witness a growth in the revenue share from the OEM/ Authorized service centers owing to the increased discounts and offers provided by these centers to retain their customers. The market shall also witness surge in the sale of used cars in Malaysia leading to the growth of car service market. Entry of new players is expected in the years to come.

Malaysia Automotive Aftermarket Services Market Poised to register a CAGR of over 3% during the period 2020-25. Will it sustain? : Ken Research

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The market shall witness a growth of CAGR 3% in the revenue share from the OEM/ Authorized service centers owing to the increased discounts and offers provided by these centers to retain their customers: Ken Research

1. Car Servicing in Malaysia Growing on the Back of Diminishing Average Age of Car Ownership

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Automotive aftermarket service started back in 1960's in Malaysia. The companies seen during this period included Kah Motor (Honda Dealer), Tan Chong Motors (Nissan Dealer) and others. Car service industry in Malaysia is growing at a CAGR of over 3%during 2015-2020. Proton and Perodua are the most popular homegrown car brands in Malaysia. Malaysia automotive ecosystem consists of 25 vehicle manufacturers and assemblers, 600 local vendors and 50,000 aftermarket establishments. Malaysia automotive ecosystem consists of over 600,000 jobs.

2. Malaysia Automotive Aftermarket Service Industry Growing with Surging Used Car Sales

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The used car sales in Malaysia has been growing steadily, benefitting the aftermarket service industry. Used car sales in Malaysia steady despite pandemic, as it has deterred people from using public transport leading to higher demand for post warranty service from multi-brand workshops. The used car sales in Malaysia recorded a CAGR of over 4% during 2015-2020.No End of Life (ELV) Vehicle Policy  is Malaysia is leading to the surging number of used cars in Malaysia.

3. Malaysia aftermarket service market anticipated to record a CAGR of over 3% during the period 2020-2025

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NAP2020 aims to enhance Malaysia’s automotive Industry in the era of digital industrial transformation from 2020-2030. The Malaysia automotive aftermarket service market is anticipated to witness a surge in the number of organized multiband service centers to cater to the demand of the post warranty car users. The car maintenance market is anticipated to evolve in the next few years with the entrance of EEVs which will demand different maintenance requirement away from the current maintenance practice. The Malaysian automotive market is anticipated to witness more number of player providing extended warranties which would lead to a higher demand for the car service from OEMs. The market is anticipated to grow at a CAGR of over 3% in the upcoming years.