USED car sales have fallen as much as 40 per cent for the first two months of the year, partially due to the new tight lending rules and sluggish consumer sentiment.
The Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) said on average its members saw a 20 per cent drop in sales for used car ownership.
"The tighter lending conditions as well as the economic uncertainty in Europe have led to the drop in sales volume in January and February this year," FMCCAM president Datuk Tony Khor said at the launch of the car industry's Interim Ownership Transfer System (STMS) here yesterday.
Its members from Malacca and Negri Sembilan said sales had dropped as much as 30 per cent in the first two months of this year, while Pahang fell a staggering 40 per cent.
There are about 5,000 used car dealers nationwide, with about 60 per cent of the total registered with FMCCAM.
Used car sales in the country, Khor said, is expected to hit about 600,000 this year, with an average of 150,000 units per quarter.
Khor noted that FMCCAM could only give rough estimates of used car sales in the country, due to the lack of a proper system to monitor the transactions of used cars.
"Currently, the registration of new ownership for used cars is done manually at the Road Transport Department (RTD)," he added.
Figures obtained from the RTD revealed that used car vehicle transaction fell by 14.5 per cent in the first two months, compared to the same period in 2011.
Used cars registered via the RTD in January and February 2012 were 41,235 units and 41,246 units, while registered pre-owned cars were 55,431 units and 41,055 units in the same months of last year.
Tight loan conditions for hire purchase of cars imposed effective this year have been blamed for the dip in the overall car sales.
Previously, the processing for car loans was based on a buyer's gross income, but since January, the central bank has directed banks to grant loan approvals based on net income, in efforts to curb household debt.
Besides, processing hire purchase loans also takes longer, between seven and eight days.
According to eAuto Sdn Bhd chief executive officer Ganesh Kumar Bangah, the used car market has always been a pillar of support to the automotive industry, acting like a conduit for new cars to be bought and old cars to be sold.
"In 2010, RM1.5 billion worth of used vehicles were traded by over 5,000 used car dealers in Malaysia," he said at the STMS launch.