(19-04-2012, 10:26 AM)Ben Wrote: [ -> ]But I am really amaze that people are still buying car at this crazy prices. Same thing for property. Singaporean boleh!
It has become so much ingrained in our system that Singaporeans begin to view such COE prices and car prices as the "norm", rather than the exception. It's pretty shocking when you tell someone that new cars actually cost like US$6,000 to US$10,000 in the USA yet down here we are paying close to 10x more!
Then again, look at it this way. For Cat A, taxi companies bid it up, plus of course those families who NEED a car. For Cat B and Open, the super rich can very well afford them. So the end result is what you see - COE prices getting higher and higher!
The Straits Times
Apr 21, 2012
Luxury cars nudging cheaper cars off road
Upmarket marques now make up 45% of sales in up-to-1,600cc category
By Christopher Tan
Premium marques are crowding out the bread-and-butter brands in the small cars category as certificate of entitlement (COE) prices zoom north.
According to the Motor Traders Association (MTA), premium and luxury brands made up 45 per cent of sales in the up-to-1,600cc segment in the first quarter.
In the same period in 2007, they had a negligible 0.3 per cent slice of the segment.
COE prices for the small cars category, seen as the category for the most affordable cars in Singapore, are now hovering above $60,000, compared with $5,000 five years ago.
Premiums have soared because the supply of COEs - which buyers need to secure before they can own a vehicle - has plunged, from more than 100,000 in 2007 to no more than 25,000 this year.
Supply has shrunk because fewer cars are being scrapped and because the annual allowable vehicle population growth rate has been cut.
With this development, premium cars like Mercedes-Benz, BMW and Volkswagen - among the first to downsize their engines following the 2007 oil shock and 2008 financial crisis - are charging ahead at the expense of historical staples such as Toyota, Nissan and Hyundai.
Sellers of upmarket cars have fatter margins to outbid rivals for COEs. 'Very soon, this segment will be for only rich people and rich companies like taxi operators,' quipped a motor trader.
The up-to-1,600cc segment has shrunk on the whole too. In 2007, it accounted for 52.5 per cent of total car sales. Today, it has slipped to 46.2 per cent, according to MTA data.
Buyers and sellers of bigger and more luxurious cars are also outbidding the others for Open COEs, which can be used for any vehicle type but end up almost exclusively for bigger cars.
The Open COE premium is now $92,000, compared with around $12,000 in the first quarter of 2007.
Despite the stratospheric prices, well-heeled buyers are still flocking to showrooms. Last weekend, premium marque dealerships collected substantially more orders than usual, with models like the BMW 3-Series and Mercedes-Benz C-Class leading the way.
A 1.6-litre 3-Series from BMW due to arrive late this year will expand the premium brands' presence in the bread-and-butter segment and drive up COE prices further.
'People should stop buying cars now, then COEs will start to fall,' said the boss of a continental dealership who did not want to be named. 'I sell cars for a living. I should not be saying this, but please, advise people to hold back.'
Industry observers said it is no longer clear if high COE prices are fuelling the demand for premium cars - because consumers do not find it worthwhile to use an expensive COE for a cheap car - or the demand for upmarket brands is driving up COE prices.
But one thing is for sure: Car prices are near record levels. A Toyota Corolla 1.6 now costs $123,000 - a whisker from its all-time high of $130,000 in 1994. That was when the premium for cars up to 1,600cc was below $60,000 but car registration taxes amounted to around 200 per cent of the open market value (OMV), or roughly the cost of a car before taxes.
Today, these taxes are 120 per cent of a car's OMV.
The sky-high prices are driving mass market buyers into a corner. Retired engineer Lee Kok Meng, 55, said he is looking to change his 81/2-year-old Toyota Camry, 'but it looks like prices are beyond my reach now'.
'I have a year and a half to consider whether to continue driving or take public transport,' he added, referring to the time left before the COE of his car reaches the end of its mandatory lifespan. 'And I think I am not alone in this.'
He said the COE system favours wealthier buyers, and it would be fairer to peg actual premiums payable to the open market value of each car so as to create 'a more level playing field'.
Sellers of budget brands have also taken a beating. The Chinese brands have almost ground to a halt, with Geely having exited the market.
christan@sph.com.sg
(19-04-2012, 10:02 PM)Musicwhiz Wrote: [ -> ] (19-04-2012, 10:26 AM)Ben Wrote: [ -> ]But I am really amaze that people are still buying car at this crazy prices. Same thing for property. Singaporean boleh!
It has become so much ingrained in our system that Singaporeans begin to view such COE prices and car prices as the "norm", rather than the exception. It's pretty shocking when you tell someone that new cars actually cost like US$6,000 to US$10,000 in the USA yet down here we are paying close to 10x more!
Then again, look at it this way. For Cat A, taxi companies bid it up, plus of course those families who NEED a car. For Cat B and Open, the super rich can very well afford them. So the end result is what you see - COE prices getting higher and higher!
Not quite 10x. About 5x depending on the categories. In Oz, a 1.8l auto Corolla Ascent is AUD22K and Hybrid Camry auto AUD30K. Still, 5x is crazy. Looks like I have to keep my car beyond 10 yrs as large car COE will go above SGD100K soon LOL.
even if u renew the COE, u still got the pay for it... looks like have to stop driving liao!
(21-04-2012, 06:38 PM)brattzz Wrote: [ -> ]even if u renew the COE, u still got the pay for it... looks like have to stop driving liao!
And to add on, you have to pay VICOM $56 every year if you renew your Coe after 10 years
I am really quite disgusted by this COE system - the brainchild of Mr. Mah Bow Tan, no doubt. It seems he knows how to make prices go up, be it cars or property!
Well, if VICOM is going to be a beneficiary of this then I guess I have some small room to rejoice, though it would feel as if it were at the expense of those who are crying out at the exorbitant prices!
$56 * 10 yrs is really really small compared to 60K COE or worst 100K soon!!!
Hey! i'm vested in VICOM TOO!! yipeee!
(21-04-2012, 06:38 PM)brattzz Wrote: [ -> ]even if u renew the COE, u still got the pay for it... looks like have to stop driving liao!
If COE is still high when my car is 10 yrs old in few yrs time, will keep the car until it conks out or stop driving. The COE is closely correlated to SGX Index. In next 5 to 10 yrs, some unknown crisis will come along???
I wonder about this condition that we have about paying a lot but convincing ourselves that it is worth it. From Ministers to properties to COEs.
I am making this bold prediction on COE prices after we finally see the cycle settling post 2017 - small cars around 50k and big cars around 70k.
The rationale is as follows.
COE is a good mechanism to regulate vehicle population in land scarce Singapore. Road networks cannot expand indefinitely.
Unfortunately, the mechanism was deliberately twigged in favour of another policy - Every Road Pays during 2004-09.
During that period, coe was artificially depressed to the extend where used car trades was almost non existent. It was during this period that Singaporeans were happily owning their undervalued cars. In the process, roads start to clog up and hence the easy justifications for ERP.
Now that the final piece of jigsaw is laid for effective vehicle population controls and revenue generation,the focus has shifted back to controlling vehicle populations.
As it stands, there are solid pillars for revenue generation - ARF, road taxes, COE and ERP. As it is very clear that land is a extremely scare resources for Singapore and with the substantial growth in Singapore population since 2007, even with present optimal vehicle population (absolute numbers), the above are stable income generators for state coffers.
Unfortunately, due to whatever reasons, the efficient public transport system started to give ample warning signals of its age and its inability to cope with the substantial demands.
Sigh... when it rains, it pours...