Indonesian consumers are opting to buy used cars instead of new ones as the COVID-19 pandemic dampens people’s spending power.

Muhammad Rizqullah, who goes by Kiki, said he bought a used car last week after trying to find one since April. The 24-year old non-governmental organization (NGO) employee who lives in Jakarta admitted he also looked into buying a new car, but even with the discount offered by online marketplaces, new ones were still out of his budget.

"I bought the car because used car prices have gone down due to lower demand," he told The Jakarta Post via text message on Thursday.

Private company employee Deka Komanda, 23, also chose a secondhand car because he could get a better model compared to a new car at the same price.

Read also: Aftermarket auto companies weather pandemic through online sales

"If you have the funds, it is time to buy a car as prices are going down during this pandemic," he said.

A study titled The “New Normal” of Indonesia Used Car Industry by classified advertisements website OLX Indonesia and its used car dealership OLX Autos Indonesia showed that 54 percent of survey respondents said they were considering buying a used car instead of a new one.

“More than half of the respondents said they were thinking about buying a car within the next year, signaling great potential for the used cars market to grow,” said OLX Autos Indonesia CEO Johnny Widodo in a statement on Tuesday.

OLX Autos, which was formerly known as BeliMobilGue.co.id, announced their rebranding on Tuesday as part of its further partnership with OLX Indonesia since its initial relationship in 2018.

The partnership was said to broaden OLX Autos' market in its offline and online platforms.    

The used car industry, Johnny went on to say, would likely need two to three months to bounce back as demand returned. 

The automotive industry has been hit hard by the pandemic and the social restrictions imposed to curb the spread of the virus, which have dampened consumer spending and affected business activities.

According to Indonesian Automotive Manufacturers Association (Gaikindo) data, domestic car sales fell by more than 95 percent year-on-year to only 3,551 units in May, a continuation of the downward trend seen since March.

Gaikindo chairman Yohannes Nangoi previously said the “rock bottom” for car sales was seen in May, expressing hope that sales could start to recover as large-scale social restrictions (PSBB) were relaxed in various cities nationwide.

Automotive industry expert Bebin Djuana, meanwhile, observed that people in general were not thinking about buying cars because of the decreased need to travel, weaker purchasing power and the prioritization of other needs.

However, he still saw opportunities for growth in the secondhand car market, as people did not want to be burdened with car loan payments during this time.

Read also: RI auto industry remains attractive: Fitch Solutions

“There is currently a downward trend in used car prices because automotive manufacturers are cutting their prices amid the pandemic-induced economic slowdown,” Bebin told Post on Wednesday.

“But as showrooms are offering discounts and new cars come with insurance, there will still be competition between the used and new car markets.”

He also observed that people were turning to online marketplaces to buy used cars, adding that such consumer behavior would become more common, especially during the physical distancing period.

“However, used car sellers are sometimes reluctant to use online marketplaces as they want to get paid immediately. They do not want to deal with complex third-party payment gateways,” Bebin said.

Editor's note: This article has been revised to correctly state that the marketplace's name is OLX Autos Indonesia.

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