Published on December 31st, 2016 | by Daniel Sherman Fernandez0
Does Volkswagen need their own used car business?
Yes, for sure. With branding still a major hurdle in the sales of new cars, Volkswagen in Malaysia needs to turn its attention to the value of their older cars in the used car market. For current Volkswagen owners (4-8-year-old cars) they are seeing a big deprecation and with only a handful of used car dealers willing to accept the used cars.
Used car dealers are also working this to their advantage by offering very very very low prices for Volkswagen cars aged between 4-8 years and adding on high margins.
4-year old cars have the last 1-year warranty on them and so they can still fetch a decent used price (which is still far lower than industry norm) however with cars 5-years and above the pickings are slim for VW owners and many turn to online classifieds with also little success as financial institutions shy away from offering loans to new buyers. This pushes prices down even further.
A quick scan of the top automotive online classifieds, which is very easy.com…shows the value of a 4-year old, 2012 VW Golf 1.4 TSI at RM48,000 whilst a 10-year-old VW Golf 1.6 (this is the pre-TSI powered VW) can still ask for RM35,000.
Then there is the 2012 Jetta 1.4 TSI at RM49,000 (pictured above) whilst its older sibling the 2007 1.6 Jetta sells for RM34,000. (pictured below) Please note that all the above prices are before negotiations and trust us when we say, there is plenty of room to negotiate. Just using the phone, we managed to get almost RM6,000 discount on a 2012 Golf TSI! That’s a new starting price of RM42,000 which is a hefty RM100k plus depreciation in just 4 years (about RM25k loss in just one year…..almost RM2,100 loss a month)
With Volkswagen Malaysia starting their own used car business, just like Mercedes, BMW and Toyota did, they can take in the older/used Volkswagens at a ‘better’ price allowing VW owners/sellers to trade up to newer model Volkswagens. Then Volkswagen Malaysia can look at all issues, fix them, include a decent warranty from the manufacturer and then bring back the confidence to the brand VW.
This will allow more VW owners to be new VW buyers and the brand name will stabilize.