An expectation The three to six month list has become a common complaint among new car buyers, not just in Malaysia, but around the world. It’s not the fault of the automakers. The automotive and industrial sectors have been among the hardest hit by the global chip shortage.
They don’t see the light at the end of the tunnel yet, as the semiconductor supply crisis is expected to last until 2023 and possibly longer. Intel Corp, the world’s largest semiconductor chipmaker by revenue, said the shortage is expected to continue until the end of 2024 due to a lack of manufacturing equipment.
The situation was further aggravated by constant shutdowns by chipmakers during the Covid-19 pandemic, when any available supply was prioritized for consumer electronics. This ultimately crippled supply for automakers and led to a growing backlog of new car orders. Several of the world’s biggest automakers, including Volkswagen and Toyota, said it remained a major issue for them.
Closer to home, the shortage of chips in Malaysia has created a ripple effect on the supply and demand chain in the automotive market. This had a negative influence on the Total Industry Volume (TIV) figures and production, leading to higher prices, a longer waiting period and a delay in new car deliveries.
The Malaysian Automotive Association (MAA) reported that the current shortage of computer chips and supply chain disruption caused by the December 2021 flood affected the number of TIVs in January 2022. It may take some time for local production and supply to return to normal. Additionally, MAA expects new car prices in Malaysia to rise due to rising raw material prices and logistics costs, which will amplify as the chip shortage persists.
These external factors have had a domino effect on the auto industry resulting in a longer waiting period and late deliveries for new vehicles. This impact manifested itself when a local automaker announced that orders placed after May 1 would not be delivered until after July 1. new car sales.
As local automakers compete to ship vehicles to buyers and adapt to this disruptive phenomenon, consumers have opened their eyes in search of attractive alternatives. Additionally, the used car market is a strong competitor, with many shifting their demands to used cars as a viable and attractive option. As consumers search for alternatives to meet their needs and overcome this disruption, used cars have risen in high demand and boosted sales in the market.
Having seized this window of opportunity, used car dealerships saw sustained activity from January to May 2021, with sales up more than 10% compared to the same period in 2020. In addition, there are has around 10 million active drivers in Malaysia, and the numbers are growing every year with first-time car buyers, half of whom opt for used cars, as the MAA reports. This reflects the strong demand for used vehicles.
Additionally, the surge in demand for used cars has led to growing opportunities for brands like Carsome to bridge the gap between vehicle supply and demand and meet the need for private transport ownership in Malaysia. Given the situation, brands in the used car market have also increased initiatives to improve the quality of used cars while providing a better customer experience to facilitate the process of owning a vehicle with options of funding.
While this serves as a stopgap solution in the dire state of supply and demand in the automotive industry, there is no denying that this situation presents an opportunity for used car players to change the perception that Used cars aren’t just “hand-me-down”.
This perception is further dispelled by key players in the used car industry offering a thorough inspection process, along with other additional services to provide customers with the peace of mind and convenience they need. For example, at the Carsome Certified Lab, all cars went through a 175-point inspection process before being selected to undergo numerous refurbishment stages to become a Carsome Certified car. The journey to used car ownership is also made easier at Carsome PJ Automall, a recently launched Carsome Experience Center where customers can view, test drive a car and explore financing options and auto detailing services. in one place for total convenience.
Regardless of the global chip shortage, used car players need to continually bolster their offerings, and what better time to do so than now, when used car demand is high. It must include guaranteed quality cars, a wide selection of vehicles in the face of growing demand, a seamless transaction experience and better customer service – to consolidate its market presence and consumer confidence.
This vision, when put into practice, not only drives the used car market forward while meeting consumer demand, but also sets a sustainable course for used car brands within the industry itself. This ultimately indicates that the Malaysian automotive industry has the potential to contribute massively to the economy as a whole.
This article was written by Alan Cheah, Country Managing Director of Carsome Certified Malaysia.