Although Malaysia is still recovering from the Covid-19 pandemic, demand in the automotive industry is stronger than ever, especially for the used car segment. As 2022 comes to an end, various news outlets and analysts project that this positive trend will continue in 2023.
If you’re planning to buy a used car in 2023, here are some trends that you should look out for before you make your purchase.
New Car Supply Slowly Recovers While Used Car Price Stabilizes
After Covid-19 restrictions were considerably loosened in the beginning of 2022, there was a significant supply shortage of new cars in Malaysia that resulted in high prices for both new and used cars, as the demand for cars skyrocketed.
Based on this article by Mekanika, they mentioned that used car dealers had to increase the price for used cars in 2022 because stocks were controlled by some sort of ‘middlemen’. This can be seen in the following example – a used 2020 Toyota Vios J was sold at RM67,000 last year, while a new car of the same model was offered at RM78,000.
As we move forward to 2023, new vehicle production is expected to accelerate in order to meet the huge backlog of orders from customers. But the new car supply issue caused by chip and component shortages is still expected to be around, albeit on a smaller scale. This will also lead to further stabilization of used car prices in 2023.
Higher Interest Rate as Overnight Policy Rate (OPR) Increases
In 2022, Bank Negara Malaysia (BNM) increased the Overnight Policy Rate (OPR) four times by 25 basis points each, resulting in a 2.75% OPR rate in November 2022. This means that those who have loans such as housing, car, and personal loans with floating interest rates from banks have experienced an increase in their monthly payment costs for four times.
There are comments from several economists that stated BNM will continue to increase the OPR in 2023, and it is expected to peak at 3.25%. Buying a new car next year might be expensive since interest rates are expected to rise, so used cars are expected to be the more cost-effective choice for consumers.
The Rise of Used Electric Vehicle (EV)
Earlier this month, Dato’ Zailani Hj Hashim, the Director General of JPJ, mentioned that there are more than 10,000 EVs that are currently registered with JPJ in Malaysia and the number is expected to increase further with the arrival of popular EV-centric brands in Malaysia such as BYD and Ora.
On top of that, the government also recently announced that they are looking into ways to bring in more affordable EVs under RM100,000 in Malaysia to further encourage EV adoption among the masses. As more people continue to adopt EVs, there will be an increase in the number of used EVs in the market.
Sedan & Hatchback Will Continue to Be a Popular Choice Next Year
Did you know that in 2022, more than 70 percent of CARSOME’s total delivery consists of hatchbacks and sedans? We expect that this trend will continue to be popular in 2023, for the following reasons.
These car types are popular among Malaysians since they’re affordable, easy to maintain and their fuel efficiency is superb – that makes them a great choice for first time car owners, young professionals, and also for those living in urban areas.
To top it off, looking at the current economic condition, it makes sense for this trend to continue in 2023 as we are expected to face various economic challenges with the expected increase for OPR and also the uncertainty of our economy.
Overall, experts agree that the used car segment in Malaysia will continue to experience positive growth in 2023, amidst rising interest rates for car loans and an unstable economic situation.
Of course, there may be positive scenarios in 2023 that will bring even more good news for the automotive industry. But until then, we’d suggest you to hold on to your steering wheels and fasten your seatbelts as you cruise into 2023.
Happy holiday and happy new year!