Do new IT platforms herald the end of the dodgy used car salesman?

More new cars are sold compared to second-hand cars due to better prices and attractive loan packages. (Bernama pic)

PETALING JAYA: Most potential customers visiting used-car lots are wary of the devious dealers they may run into there.

They suspect the smiling salesman may be trying to take them for a ride by using underhand practices when buying and selling second-hand cars.

“Unscrupulous dealers advertise false manufacturing years and list unbelievably low prices just to attract customers,” Federation of Motor and Credit Companies (FMCC) secretary-general Khoo Kah Jin told FMT. “This is very unhealthy.”

Factory-fresh cars sporting lower price tags are streaming into showrooms, and together with more attractive financing steering a surge in new car purchases.

More brand-new cars are currently being sold than used ones, according to the FMCC, which represents over 4,000 Malaysian used-car dealers. This leaves dealers suffering a lack of customers and so being driven to look for ways to boost their sales.

Khoo believes digital technology will bring positive change to the industry. The move to online trading and regulation is accelerating.

The online platforms being adopted by used-car dealers digitise how people buy and sell cars. They streamline the process, eliminate paperwork, and keep dealers honest into the bargain.

Sites where customers bid for vehicles are proliferating. Since processes are automated and regulated, signed-up dealers can assure buyers they are getting the quality they are paying for.

The FMCC is developing its own platform to link all used-car dealers together and provide a wide database of used cars for sale.

“It’s like an eBay for cars and will help us analyse which vehicles and services customers prefer,” said Khoo.

Inspection, payment and ownership transfers are all handled by the platforms, so sellers only need visit their garages to get started. Some platforms are also linked to banks to facilitate loans.

Both buyers and sellers benefit. And the dealer too.

For dealers have their own bureaucratic problems which online platforms are also tackling.

“Let’s say a dealer takes a car from a customer, and the owner passes away before the car is sold. That becomes a problem and a risk for the dealer,” said Khoo.

Traditionally, ownership of a car was only transferred when there is a buyer and the loan or payment is approved. This involved a lot of paperwork and bureaucracy.

The electronic Interim Ownership Transfer System, or the Sistem Tukar Milik Sementara (e-STMS), links used-car dealers directly to the Road Transport Department (JPJ) via the internet. It is having positive effects.

“Now, if a car isn’t sold in six months, ownership is transferred automatically to the dealer,” Khoo said.

Investment in such technology is booming, much of it coming from abroad.

Foreign investors, realising that Malaysians are becoming more digital-minded, are beginning to pump money into online platforms designed for the used-car industry.

Online Malaysian car bidding site myTukar aims to provide a more accurate and transparent valuation and buying process. Established in 2017, it has already sold more than RM200 million worth of cars using new online technology.

MyTukar recently received a RM120 million capital injection from Carro, a Singapore online used-car marketplace.

Carro CEO and founder, Aaron Tan, justified the huge investment by saying that Malaysia is among the most digitally-savvy countries in Southeast Asia.

“So this is the logical next step for us after expanding in Thailand and Indonesia,” he said.

MyTukar CEO and co-founder, Fong Ho Sum agrees. “To grow their revenues, traditional used-car dealerships in Malaysia must embrace digital technology to reach a wider customer base.”

The combined effect of more dealers signing up to online platforms, the increasing use of e-STMS, and huge foreign investments make it clear that technology can help improve the used-car dealers’ business model and make it more competitive with new cars.

It should also lead to the end of the dodgy dealer by ensuring a more straightforward and transparent buying and selling experience for the motoring public.