Authorised Dealers eye a larger piece of the lucrative used car market

With the diminishing trend of the Certificate of Entitlement (COE) quota, the demand for used cars is expected to be on the rise. While most of the Authorised Dealers were previously working with third-party partners to serve the used car market, many are now heading in the direction to grow their in-house used car business.

BMW agent Sime Darby Motors and multi-franchise Jardine Cycle & Carriage, which carries brands such as Mercedes-Benz, Mitsubishi and Citroen here, are two major car dealers that are poised to acquire the sole ownership of their currently shared used car divisions.

Multi-franchise Jardine Cycle & Carriage said it has entered into an agreement to acquire 30% of used car dealer Republic Auto for $30 million. The deal - a $25 million payment was completed on June 30, with the remaining $5 million to be paid a year later - will see Jardine C&C owning Republic Auto fully.

Sime Darby Motors has likewise entered an agreement to acquire the remaining 40% shares of Performance Premium Selection Ltd (PPSL) that was held by Tanglin Cars in November 2021. "This acquisition is part of our strategy to grow the pre-owned car business," said a spokesperson from Sime Darby Motors.

Major car dealers have always been involved with the used car business, through the vehicles that customers have traded in. While multi-franchise Wearnes Automotive used to sell their inventory of used vehicles wholesale to second hand car dealers, it is also planning to strengthen its pre-owned car business.



According to Andre Roy, Chief Executive of Wearnes Automotive, the company will be expanding not just space, but also additional staff and marketing in order to place a larger focus on the retail aspects of its used car business.

With dealers such as Jardine Cycle & Carriage poised to spend $30 million in its acquisition of the sole ownership of Republic Auto, the perceived importance of the used car business is clear.

Indeed, in the climate of perpetually shrinking COE supply, used car transactions can surpass the number of new cars registered - just last year, the number of used cars changing hands was about 80,500, almost twice of the number of new cars registered.

The last time these companies refocused their attention on used cars was 10 years ago, when the COE supply hit bottom. The COE quota is expected to continue shrinking till 2023.