Automotive

Published on February 22nd, 2020 | by Daniel

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Miti about to award 9 NEW AP businesses

We have just been informed by Miti insiders that there are a further nine (9) new used car approved permit (AP) holders coming in 2020 to compete with the 36 used car AP holders that were awarded this ‘special paper’ in 2018 by the previous ruling government. Do we need more AP holders to crowd the market? Well, MITI believes that by ‘spreading’ the number of AP’s to more smaller dealers and have less AP ‘kings’ makes more sense and better pricing. This we will agree as this brings AP car prices down and offers buyers better added value from AP car sales.

This means that the original 164 AP holders now have more competition to deal with as the market for imported cars gets heated up with lower profit margins and higher costs (currency exchange and increased import tax).

The Ministry Of International Trade & Industry (MITI) has not increased the total number of used car Approved Permits in the eco-system, instead they have just redistributed the given number to more individuals to enter this once very lucrative business. Some established AP holders have had their given AP’s reduced.

So, this means that each new AP holder has say between 60 to maybe even 240 AP’s a year to import used cars from England and Japan; clean and polish them, spend a little on new tires, battery and tinting and then make some very decent profit as they have no investment in after-sales, warranty, training, branding and so on.

BMW

From our investigation, the total number of AP’s issued each year is capped at 10% of the number of local-assembled cars in the preceding year.

  • 60% Of APs are given to Bumiputera Open AP holders
  • 40% Are given to franchise holders. Franchise APs that are given out for free to franchise holders of car brands registered with MITI.

These AP’s are not just handed to 9 new companies just like that. Each new AP holder must have at least RM1 million in their bank for every 60 AP’s issued. So……for 60 AP’s you need RM1 million. 120 AP’s you need RM2 million. For 180 AP’s you need RM3 million and the largest possible amount which is 240 AP’s you need RM4 million. Then you need to show your working showroom and credentials to confirm you know how to run the used car business properly. MITI does not want any new and current AP holder to be ‘selling’ their AP’s to used car businessmen in the market like it was done before.

Mercedes Benz

Well, there are still established AP holders who continue to ‘sell’ their AP’s to used car dealers and just sit back and enjoy the FREE money that comes in but it is the job of MITI officers to find them and catch them. We know that some have been caught and others have rushed to open showrooms in prominent city locations to ‘show’ they are running the business.

So, why do we need more Open AP holders? Is it to share the healthy profit pie or is it to keep imported luxury car prices high, or is it to give Malaysian imported used car buyer’s better options?

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