Untapped Opportunities in Malaysia’s Auto Leasing Market Presents Expansion for Market Players

reogma|Untapped Opportunities in Malaysia’s Auto Leasing Market Presents Expansion for Market Players
2 mins read

Auto leasing is a largely untapped market in Malaysia with tremendous potential for growth over the course of years — mid and long-term.

The possible implementation of End-of-Life Vehicle (ELV) policy, high vehicle price and growth in e-hailing are three prominent factors to drive the country’s auto leasing market toward prosperity.

ELV policy: This policy is regularly discussed by policymakers in Malaysia, so if and when implemented, it would remove vehicles that are past its prime. Consequently, a significant portion of individuals and/or companies would be compelled to replace their existing cars and CVs. Therefore, the implementation of this policy will open more opportunities in the auto leasing market in Malaysia.

High vehicle price: Malaysia’s automotive industry is among the most protected and tax-burdened compared to other countries; import duty can go up to 30% an excise duties range between 65% and 105%. This impinges upon the customer’s decision to purchase vehicles but encourages auto leasing, especially commercial vehicles.

Growth in e-hailing: The outlook of e-hailing is extremely promising in Malaysia as both taxi e-hailing and private car e-hailing are doing well. Partnering with e-hailing could potentially open new avenue of growth for auto leasing market participants as they can lease out large fleets to e-hailing service providers by offering value-added service such as maintenance and repair as a part of the leasing contracts.

The competitive market of Auto Leasing in the country is led by SPANCO, an organisation that only delivers services to the federal government and its statutory bodies due to a Concession Agreement (CA) with the government of Malaysia for end-to-end fleet management. However, SPANCO’s CA with the federal government will end on 31st December 2018, which may unlock new business opportunities for other market participants that can possibly win the contract with the Malaysian government.

SPANCO, along with other market participants such as Hertz, Mayflower, Avix, Orix, Insas Pacific, Europcar and Hawk account for 75% of the overall fleet size whereas the remaining 25% is accounted to unorganized market of Auto Leasing. The corporates are the main customer base of Auto Leasing firms since nearly 97% of the Auto Leasing business is done with them.

The market of Auto Leasing and Car Rental in Malaysia is expected to grow at a Cumulative Annual Growth Rate (CAGR) of 3.8% reaching roughly 40,000 units from 33,000 units between 2016 and 2021.

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reogma|Untapped Opportunities in Malaysia’s Auto Leasing Market Presents Expansion for Market Playersreogma|Untapped Opportunities in Malaysia’s Auto Leasing Market Presents Expansion for Market Players

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