The used car industry is projected to register double-digit growth in 2022, 2023, and 2024 with a compounded annual growth rate (CAGR) of 10% over the period. This is encouraging for Used Car Dealerships in Malaysia! Despite this, used car dealers face three challenges that could stop them from tapping into this growth.
- Limited Cash Flow to Expand Floor Stock
Some businesses may experience difficulties to increase their floor stock despite recording increased revenues. Cashflow is the net amount of cash and cash equivalents being transferred in and out of your business. How much money – and how fast – you’re receiving after a sale can impact how much you can use to cover your expenditures – including when expanding your floor stock and inventories. While waiting for the money to be transferred into your business account, you may need to prioritise other expenditures. This balancing act is crucial for your business continuity.So, one solution businesses like yours can consider is freeing up cash flow. Measures like cutting expenses, stretching payments within the acceptable period, or paying off debts could free up some money. This is limited by how much you can cut or pay. You may still find challenges to replenish or expanding your floor stock.
Lost Opportunities Due to Slow Sales Transactions and Turnaround Time
Cars are often regarded as high-ticket purchases. It is natural for consumers to procrastinate on a decision. Once they do, you must figure out how soon you can receive the payment. It’s not an issue when you’re receiving cash sales. When you include third-party financiers, both you and the customer will face a longer transaction and turnaround time. After all, these hire-purchase providers may take time to perform their know-your-customer (KYC) and due diligence. Some dealers have seen highly motivated customers might walk away from a purchase because the financing turns complicated or takes up a long time.Thus, used car dealers are forced to look for ways to cut down the time and process. The faster the customer can close the deal or get financing at the dealership, the faster the sale is closed. It also minimises the wait time for both dealers and customers.
- Uncertain External Economic Conditions and Supply Chain Disruption
Despite the optimistic outlook for the used-car segment, dealers cannot ignore the cautionary warnings made by global economists. A global recession is headed our way. Sooner or later, consumers may feel its effects. The market can turn soft as consumers delay high-ticket purchases. Besides this, the industry cannot ignore the supply chain disruption faced following geopolitical conflicts, fluctuating currency rates, semiconductor shortages, and China’s current zero-COVID-19 policy.Used car dealerships need to bolster their emergency fund while maintaining a healthy cash flow. Besides that, used car dealerships need to develop a contingency plan designed to help them respond effectively to a significant future incident, event, or situation that may or may not happen. Plan B ensures that the business, the customers, and other stakeholders know what would happen when that major event occurs.
Dealer Financing Campaign Promotion 2022
To help Malaysian used car dealerships improve their cash flow, Funding Societies is launching the new and enhanced Dealer Financing! Enjoy fast approval disbursement within 2 working days*!
What will used car dealers get from this newly-enhanced Dealer Financing programme?
For a limited time only, stand a chance to be rewarded with an RM50 Touch N’ Go eWallet reload PIN* AND RM150 OFF the Utilisation Fee for your first drawdown when you grow your used car business with Funding Societies’ Dealer Financing!
This campaign period runs from 29 November 2022 to 31 December 2022. Grab this opportunity today!
For more information on Funding Societies Malaysia’s Dealer Financing and the terms and conditions of the ongoing promotion, please visit the campaign page.
*Subject to terms and conditions.