Malaysia car service to hit $6.8 bil. by 2025 as used car sales surge

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By Charlotte Chong

KUALA LUMPUR, NNA - Surging used car sales in Malaysia with 440,000 sold in 2020 and the entry of new players are expected to drive up demand for aftermarket services over the next few years.

The 2.9 percent compound annual growth rate (CAGR) of car servicing in previous years is expected to go up to 3.1 percent from 2020 to 2025 and create a robust market valued at $6.8 billion by 2025, according to Ken Research.

In its report, the India-based market research firm, said, "Malaysia is witnessing a growth in the used car sales, which is contributing to the rising average age of cars in the country, therefore an impetus for the car service market. Lack of car components such as electronic chips in Malaysia in 2020 had raised issues such as production of new cars and delay in delivery in the short to medium term, leading to increased demand for used cars."

The shifting focus of consumers from buying new vehicles to maintaining old ones is leading to an increasing surge in used cars on the road, it added.

With the steady rise in second-hand car sales, the number of registered cars is likely to grow 1.1 percent annually till 2025. This is despite the slowdown of the automotive production and the COVID-19 pandemic causing a sustained downward trend in new passenger car sales in 2021 in Malaysia.

Technological advancement is also contributing to the growth of the car service industry in the country, said Ken Research.

Car servicing companies have started to adopt technologies such as live end-to-end updates, service tracking, round-the-clock grievance redressal and online booking.

"The ease of booking a car service and tracking the service status has led consumers to visit the service center for regular or minor car maintenance as well," it noted.

On the choice of car service centers, those serving multiple brands are preferred by most users of out-of-warranty cars which account for about two-thirds of registered cars. Lower costs and availability of quality spares from reputed suppliers are driving the growth of multi-brand workshops.

OEM car service centers usually cater to pre-warranty cars whose owners value reliable and superior service and genuine spare parts. They are expected to grow at a CAGR of 11.7 percent.

OEM service providers include authorized players for local brands such as Perodua and Proton, and Japanese brands like Honda, Toyota, Nissan and Mitsubishi.

However, services at multi-brand workshops can be 40 percent cheaper, which is the primary reason consumers flock to them when their vehicles enter the post-warranty period.

Among the companies servicing different car brands are Dtox, Prestige Cars, Topbest Car Grooming, Autohaus KL, Top speed, and Auto Mobile Garage.

Sedan cars contribute the largest revenue for the car service industry in Malaysia, followed by hatchbacks, sport utility vehicles and multi-purpose vehicles.