Covid-19: Used and recon car dealers may layoff workforce as crisis extends

Malaysian used and recon car dealers and their 50,000 plus workforce are at risk of being laid off should the Covid-19 crisis prolong for more than 2 months, according to a report by New Straits Times (NST).

While dealers have braced for the impact of the Movement Control Order (MCO), the practically zero sales which leads to higher inventories, poor consumer sentiments on the economy, and high fixed operational cost are taking their toll.

President of the Malaysian Association of Malay Vehicle Importers and Traders (PEKEMA), Datuk Zainuddin Abd Rahman told NST, “If the situation prolongs, we have to reduce manpower cost or might reduce headcounts. We also have high debts of RM1.8 billion among our members in terms of inventories,”

PEKEMA is an association for reconditioned cars with 177 members and each has a monthly commitment of RM 200,000 that includes salaries, utilities and rental.

Datuk Zainuddin said that PEKEMA members had contributed over RM2.8 billion to Kumpulan Wang Amanah Dana Automotif Bumiputera (KWADAB), and hopes that the government would consider them tapping into the funds as means of financial assistance in this challenging period.

President of Kuala Lumpur and Selangor Car Dealers and Credit Companies Association, Khoo Kah Jin said, “We have a total workforce of 40,000 locals comprising office personnel and salesmen. Our members spend about RM120 million monthly for salaries, rentals and utilities,”

They are also known as Federation of Motor & Credit Company Association of Malaysia (FMC), which is an association for used car dealers.

Khoo added that they have adequate cash reserves for a buffer period of two months in terms of fixed operational cost without sales. Should the crisis prolong, they will need financial assistance from the bank.