Since last year, I’m sure we’ve all seen plenty of news outlets reporting that Malaysia will be facing an economic recession this year. While Bank Negara has assured us as of this month that the country will not plummet into a recession, it’s best to remain prepared as there are still plenty of unstable factors in the global economy looming over us.
Aside from refraining from high expenses, one such area where you can save a lot of money is in the choice of your car size. When a recession does come in full swing, it’s quite common to see luxurious cars being sold off into the used car market for a smaller, economically viable one. If you’re contemplating whether to sell off your luxury vehicle for some fast cash, here’s why downsizing your car is a smart move for the upcoming Malaysian recession.
A general rule of thumb is to understand that cars are depreciating assets. Let’s start with the main benefits of downsizing to a smaller car – you get a smaller initial purchase cost. A used Perodua Viva, for example, will go around RM20,000 in the used market. Say you trade in your BMW or a Mercedes at a used car dealership for some fast cash, and after purchasing a used Viva for your daily commute, you’ll still be left with a lot of money. It’s a win-win solution that doesn’t break the bank. With some leftover cash, they can be used to cover other expenses such as housing, food, and other necessities. If you’re a fresh graduate looking to get a car for your daily commute, buying a brand new car can be dangerous as it is one of the leading causes of young Malaysians facing bankruptcy in the country.
Conversely, demand for used cars will also go up during a recession. A bad economy will force consumers to look for more affordable means of transportation. With new car prices out of the question, the masses will turn to the used car market to save money. When demand for a certain commodity increase, so does its price. It’s just a simple supply and demand logic. Your humble little Myvi at home can fetch a much higher price in the used car market if you decide to sell it off.
Read More: Should You Buy a Car in a Recession?
Cheaper Road Tax and Maintenance
Trading a large 2.5L car for a smaller 1.5L one can save a lot of money on fuel and road tax.
Cars with smaller cubic centimeters (CC) have smaller road taxes, are fuel-efficient, and won’t hurt as much when you need to refill petrol. The current Nissan Almera that I drive daily is a 1.5L, four-cylinder engine. On average I only need to refuel once every five days for around RM57. The Nissan Almera is just one of the few cheap economy cars that will remain triumphant when the recession strikes.
Don’t let the size of engines these days fool you too. Modern engines in economy cars like the Perodua Ativa or the Daihatsu Ayla (sold in Indonesia) have turbochargers to accommodate their small CC engine of 1.0L. They’re not built in for power but rather for fuel economy.
Downsizing your car can also ease the wallet on maintenance. Smaller cars are more reliable and fuel-efficient than any gas-guzzling V8 or V12. Anything more than a six-cylinder inside your engine will be problematic to maintain due to additional mechanical complexity. If you have to choose a smaller vehicle, opt for domestic or Japanese-branded cars as parts are easier to source than Continental cars. Smaller cars also run on smaller tires making them cheaper to replace. The cherry on top of a smaller car is it is cheaper to insure than a full-sized luxurious one.
Read More: 6 Tips to Prepare for a Recession as a Car Owner
Small and Nimble to Drive Around
The natural progression in technology has made car engines get smaller but their output can rival sports cars from the 70s and 80s. Small engines these days can pack a punch above their size. Take the three-cylinder Tiny Friendly Giant (TFG) engine powering the Koenigsegg Gemera for example. Apart from its revolutionary engine design, the TFG has an output of 590 hp and 600 Nm of torque without assistance from its electric motor! Ok, that’s too far-fetched to be featured in an economy car but you get the point here.
Closer to home, most Malaysians still have a stigma against downsizing to a smaller engine. If you can look past the numbers, there are cars offered in Malaysia that have small engines yet have proven naysayers wrong. The success of the Proton X50 and Perodua Ativa despite being powered by a small-yet-mighty turbocharged three-cylinder engine. A smaller CC, combined with a shorter wheelbase also means it’ll be agile around corners and easier to navigate around town efficiently.
Try reverse parking with a Ford Ranger compared to a Honda Jazz, which one gets the job done faster?
Good for the Environment
Lastly, downsizing to a smaller car can also be beneficial to the environment. If you’re someone who’s environmentally conscious yet unable to afford an EV, get a small used car. Buying a used car skips the exploitation of natural resources and emissions created during the process of making a brand-new car. This can be an important consideration for those who are concerned about their carbon footprint and the impact that their lifestyle choices have on the environment.
Regardless of your stance on downsizing your car, an economic recession may sometimes force your hand to sell off your beloved car just to make ends meet. But fret not, there is always a chance to locate your ride and buy it back when the economic situation turns for the better.
Ultimately, it all boils down to each different individual’s lifestyle and choice. Buying and selling off a car is a huge decision and we strongly urge you to weigh the pros and cons before biting the bullet. Would you be ok trading in a large SUV for a small and nimble hatchback? Let us know in the comments below!
Read More: BMW CEO Said Used Cars Are Good For The Environment