Carro CEO says chip shortage hit used car market too

The ongoing global chip shortage that has hit multiple tech industries is also hurting the used car space in Southeast Asia, with fewer new cars being sold causing a “supply crunch” in the second-hand market.

“People always think that the used car industry is quite separate from the new car business in itself,” said Aaron Tan, CEO of Carro, at this year’s Tech in Asia Conference. “It is actually quite intertwined.”

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Although Tan didn’t go to specifics, there have been reports on how demand for used cars has risen with no new cars up for grabs. China’s auto sales have dipped, reported The Wall Street Journal, but prices for pre-owned cars are expected to remain high, according to Business Insider. 

For now, digital car dealers will have to weather through the new car industry’s chip drought as they remain optimistic for the used car market in the region.

“At the end of the day, used car business is a byproduct of new car business. The new car [business] has to go up,” said Johnny Widodo, CEO of OLX Group Indonesia, at the same event.

He also noted other factors such as a country’s gross domestic product to a buyer’s personal life milestones as main factors for car adoption. But he adds that government tax reliefs and foreign investments on local carmakers can drive car ownership in Southeast Asia higher.

For Tan, electric vehicles (EVs) can be a catalyst to help address supply issues in the used car market, while at the same time pushing environmentally-conscious consumers to buy EV cars. “The more EV cars are being sold, the more used cars are being sold,” he added.

Tan also argued that the used car segment helps environmental goals by “recycling” vehicles, since players promote “reusing and reducing of vehicles [in] a sense.”

Asia has seen a rise in EV investments, although adoption in Southeast Asia has been mixed.