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Monday April 17, 2006

Used car dealers hit hard

KUALA LUMPUR: Used car dealers may lose about RM160mil due to the drop in car prices and interest rates adjustment.

Federation of Motor and Credit Companies Association of Malaysia president Datuk Tony Khor said there were about 5,000 car dealers in the country.

“Let’s say 80% of their stock range is between RM20,000 and RM60,000 and out of these, there is a price adjustment of RM2,000 for each vehicle.

“If one dealer has 16 units, he would lose about RM32,000 while the whole industry is estimated to suffer a loss of RM160mil,” he said yesterday.

Those still holding large fleets of cars acquired before the announcement of the National Automotive Policy (NAP) last month were likely to be worst hit as they would have to dispose of their cars at lower or even no margins following the drop in value.

MUCH CHEAPER NOW: Used cars awaiting buyers in Kuala Lumpur recently. The price of used cars has dropped sharply following the announcement of the National Automotive Policy last month.
Malaysian Automotive Association president Datuk Aishah Ahmad said this was only to be expected as used car prices would normally move in tandem with new car prices.

“That is the risk in doing business but I believe that used car dealers are shrewd businessmen and will be able to recover,” she added.

Goh Peng Eam, general manager of TopMark, a used car dealer, said the second-hand car market was still volatile and had not fully adjusted to the lower new car prices under the NAP.

Stephen Liang, manager of used car company Karmart Enterprise, said consumers were getting smart now and would visit several used car dealers to get the best price for their old cars.

“I have been approached by several owners who wanted to sell their old cars but were asking for pre-NAP prices. I guess they find it hard to believe that the price of their old cars has dropped so much overnight,” Liang said.

In Petaling Jaya, checks with a number of used car dealers found that the trade-in value of an eight-year-old Proton Wira 1.5(A) had dropped from between RM18,000 and RM20,000 to about RM14,000.

For a three-year-old Wira, some dealers were willing to accept trade-ins of between RM28,000 and RM30,000, depending on the condition compared to about RM31,000 to RM33,000 a month ago.

A brand new Wira costs about RM48,000, down from RM51,000 a month ago.

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