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The Straits Times
Published on Mar 15, 2013
Some car prices cut by more than $30,000

By Jermyn Chow

A DAY after certificate of entitlement (COE) premiums went tumbling, prices of some mass- market cars also followed suit - some by more than $30,000.

Car dealers started cutting prices yesterday, after COE premiums for small and big cars fell between 4.6 per cent and 37.3 per cent in the first bidding exercise since drastic car loan curbs and a tiered tax system were introduced last month.

The price cuts ranged from a modest $1,000 to over $30,000.

A smaller car like the Nissan Sylphy 1.6 now costs $100,800 - down from $127,800 before bids closed on Wednesday - while a bigger car like the Toyota Camry 2.0 Auto is going for $154,988, down from $172,988.

The cheaper prices factor in lower COEs, which some dealers are now expecting for small cars in the next round of bidding.But at least one dealer decided to buck the trend: Volkswagen slapped an additional $8,000 on the price tag of its smaller cars, like the Scirocco R and Golf 1.4 TSI.

On Wednesday, COE premiums for cars of up to 1,600cc slid by 4.6 per cent to $74,689, while those for cars above 1,600cc fell by 37.3 per cent to a two-year low of $58,090. Open COEs, which are used mainly for bigger cars, ended 29.3 per cent lower at $65,001, also a two-year low.

It is rare for COEs for bigger cars to fall below those for smaller cars. But traders expect the price gap between these two COE categories to close in the next few rounds of bidding, especially after they have slashed car prices.

Mr Johnny Tan, sales manager of Mazda agent Trans Eurokars, said he has started getting calls from customers who were more keen on the big cars. Mazda prices have been cut by $4,000 for cars up to 1,600cc, and by $20,000 for those above 1,600cc.

"They now see these cars as more value-for-money," said Mr Tan. "We expect bigger crowds in the showrooms this weekend as people want to cash in and snap up the good buys."

But Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said buyers may hold off in the hope that COEs dip further. "Car hunters who can afford to buy now are cash rich, but they still prefer to pay less and want COEs to go down further or at least reach saner levels," he said.

Motor Traders Association president Cheah Kim Teck said he expects COEs to normalise in the next few months.

He said: "For big-car COEs to drop by nearly 40 per cent this time round is a knee-jerk reaction. More people will be enticed to buy the bigger cars and end up pushing up COEs in the next round."
Currently, this over supply will moderate ove time as demand picks up. Just like the cooling measures for property, demand drops for a while and then it picks up again. Unless, liquidity and consumer preference for cars change.
I say let's wait for MAS to close the hire purchase loop hole.
That will drastically reduce the affordability and liquidity.
After prices drop, suddenly you realize there are so many cash-rich people who are super eager to get a car. This was certainly beyond my wildest expectations! I had thought everyone would hunker down and give up their "dream". Oh well.

The Straits Times
Published on Mar 17, 2013
New car sales JUMP

Cash-rich buyers flock to showrooms as COE rates for big cars dip and dealers cut prices

By Walter Sim

Sales of new cars improved and there were sharp increases in customer traffic on the first Saturday after certificate of entitlement (COE) prices plunged last week, showrooms reported.

This was the first bidding exercise after the Government announced drastic car loan curbs and a tiered tax system last month that hit luxury cars hard.

Premiums for cars above 1,600cc fell nearly 37.3 per cent to close at a two-year low of $58,090. Open Category COEs, used chiefly for bigger cars, also ended 29.3 per cent lower at $65,001, also a two-year low.

Meanwhile, premiums for those up to 1,600cc closed at $74,689.

After the bidding exercise, car dealers began slashing prices ranging from a modest $1,000 to over $30,000, to take into account the fall in COEs, and in anticipation of the next round of bidding.

Yesterday, many car hunters were eager to score a good deal on a new luxury car.

Heavier-than-average foot traffic was reported by these dealers as cash-rich buyers shopped around, with sales also on the rise. Mr Victor Kwan, managing director at Volvo agent Wearnes Automotive, said foot traffic and sales tripled that of an average weekend.

"For this period, sentiments will be primarily driven by the COE price plunge," he said, adding that Volvo has priced in discounts of between $20,000 and $30,000 for both Category A and Category B vehicles.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said sales and traffic were up over the previous weekend.

Nissan car prices for Category A have been cut by $27,000, while Category B cars are cheaper by $31,000 than before bids closed last Wednesday.

The spike in traffic is a U-turn from two weeks ago, when buyers steered clear of showrooms because of the car loan curbs. Buyers must put a down payment of at least 40 per cent for a new vehicle, while the maximum tenure for a car loan is now limited to five years.

A 51-year-old IT executive who bought a new BMW 520i yesterday said it was time to take the plunge after months of waiting on the market. He declined to give his name, but said: "We have always wanted to upgrade our Toyota Corolla, but felt it was not sensible due to the high COE prices then."

Others felt a wait-and-see approach was prudent.

Auditor Michelle Tan, 28, was seeking a second car in addition to her family's Audi A5 Coupe, and looked at the Audi Q3, BMW X1 and Mercedes-Benz B2000.

She too was tempted: "We were looking for a second-hand car, but now that the COE prices have fallen, it is more worthwhile to look at a new vehicle. But we feel there may still be scope for prices to drop further."

But if the demand for Category B cars persists, COE prices may well rise in the next bidding exercise.

Said Mr Johnny Tan, sales manager of Mazda for Trans Eurokars: "It is all about demand and supply. With a fixed number of COEs and such high demand, prices will likely go up."

The Straits Times
Published on Mar 17, 2013
Used car sales SLUMP

By Jermyn Chow

Used car dealers reeling from the effects of tough new car loan curbs are urging landlords to cut their rent, while they try to sell off vehicle stock to stem losses.

More than 100 bosses of used car centres in Turf City and Commonwealth are asking for the reprieve after last month's drastic measures to cool the market kept customers away.

Things are set to worsen in the wake of tumbling certificate of entitlement (COE) premiums and dealers of new cars slashing prices.

Second-hand car sales have more than halved but dealerships say their monthly rentals form about 40 per cent of overhead costs. At Turf City, for example, they pay between $6,000 and $9,000 for an office and 15 car lots.

Sixty-two of the 70 second-hand dealerships there have teamed up to write to landlord Cogent Holdings, asking to meet to discuss rent cuts or have their contracts reconsidered. Cogent, however, has declined to meet up.

At Commonwealth, more than 40 dealerships are writing to the Singapore Land Authority to ask for rent waivers.

Given the plunging sales and high costs, many say they are considering closing down. Dealers told The Sunday Times that at least 20 dealerships islandwide have pulled down their shutters for good, with dozens set to follow suit.

Apex Trading managing director Thomas Lim, who is spearheading the Turf City appeal, said: "Our sales and commissions are down, we incur huge losses with each transaction but still pay the same overheads... How to survive?"

Second-hand car values have fallen by as much as 30 per cent.

The asking price for a year-old BMW 5 series is now $190,000, down from about $215,000 before the Feb 26 loan restrictions. But car buyers are still not biting.

Mr Lim said: "We are no longer running a business. We can only cut prices, get rid of our stock and pray things get better."

Mr Andrew Cheong, 42, of In-carz Automobiles in Commonwealth, did not sell a single car last week. "I've been through a few bad cycles when the authorities tightened car ownership policy but this is the worst I've seen," he said.

The cooling measures cap car loans at up to 60 per cent of purchase price and halve the loan's maximum duration to five years.

The Singapore Vehicle Traders Association has appealed to the Monetary Authority of Singapore to ease loan restrictions. Its latest proposal is that new loan curbs not be applied to vehicles bought by used car dealers before Feb 26, when the restrictions kicked in.

Association president Neo Tiam Ting, representing more than 400 used car dealers, said he has not heard from the MAS.

He told The Sunday Times he plans to send a petition to Prime Minister Lee Hsien Loong this week, adding: "Something needs to be done now to stop the used car industry from hitting a dead end."

Yesterday, Mr Neo and a group of car dealers met Senior Parliamentary Secretary of Education and Communications and Information Sim Ann in the Turf City used car centre. She declined to say what was discussed during the hour-long meeting.

Mr Eugene Chng of Cosmo Automobiles said: "Any kind of help now would be good. It is like a waiting game to see who goes bust first."
This is not surprising, considering that Spore is at FULL employment and folks continue to feel rich with their housing asset price/s pumped up by Helicopter Ben.

Most probably, the current price-drop will only be viewed as a correction (in time to come, on hindsight). Very similar to how equity markets work too - a full bear market is often preceded by a series of corrections in which volume is well supported by investors (waiting to get into the game) and company/insider buybacks (feel good, flush with cash), forming some kind of 'head and shoulder pattern' before the perfect storm sets in!
Haha Weijian, tell that to these people in the article below! Tongue

The Straits Times
Published on Mar 19, 2013
Spike in new car sales at the weekend

By Royston Sim

MOTOR traders reported strong sales at the weekend - some up to four times the normal rate - as prospective new car buyers flocked to the showrooms.

Industry observers said continental makes such as BMW and Mercedes-Benz saw the highest demand, fuelled largely by the dive in certificate of entitlement (COE) premiums for cars above 1,600cc last week. While orders for bigger vehicles went up, sales of smaller cars also remained high.

Mr Victor Kwan, managing director of Volvo for Wearnes Automotive, said sales were three to four times that of an average weekend, with this last one being one of the strongest in recent months.

Cycle & Carriage sold out its Mercedes-Benz E200, which was priced at $229,888, down from $261,888 before the latest tender. Nearly half of the E250 models in stock at the agents were sold, The Straits Times understands, while the new A-class was also popular.

COE premiums for cars above 1,600cc plunged by nearly 37.3 per cent to close at $58,090 last week, a two-year low. Prices of Open category COEs, used mainly for bigger cars, ended 29.3 per cent lower at $65,001.

Top models, such as the BMW 5 Series, were much sought after. A spokesman for BMW agent Performance Motors declined to give sales figures, but said its showrooms were crowded.

A Volkswagen spokesman said there was significantly more showroom traffic compared with an average weekend, while orders received were up too.

Mr Ron Lim, general manager of Nissan Agent Tan Chong Motor, said sales were 30 per cent to 40 per cent higher than average, due in part to its recently launched Sylphy sedan. "I don't recall the last time there was this kind of exuberance. Private car sales were tremendous," he said.

Apart from being attracted by the lower premium for bigger cars, some buyers may be fearing that premiums will go back up.

Motor traders predict big car COE premiums are likely to rise again in the next bidding exercise, possibly breaching the $70,000 mark again.

Observers reckon that demand is also fuelled by the availability of financing from credit companies and lenders.

These institutions do not come under the scope of the Monetary Authority of Singapore, which capped loans for new and used cars at 50 per cent or 60 per cent of the purchase price, and limited the loan tenure to five years. They can offer loans above 60 per cent with tenures longer than five years.

The Government is reviewing the Hire Purchase Act to plug these loopholes.
I went to e Audi showroom to look see look see since they adv that audi A6 selling at 200k.
Gosh that place is so pack that i thought i am in st james...
All the car price that they adv is correct but only first 10cars and cannot choose colour.
CAT B will rise in the next bidding.
The Straits Times
Published on Mar 24, 2013
Your letters
Car population growth: The key issue

The commentary, "Car ownership scheme should be better managed" (March 10), may be barking up the wrong tree.

The certificate of entitlement (COE) system was designed as a price clearing mechanism for the Government's heavy and continued intervention in the car market. A high COE price is not necessarily bad, nor is a low COE price necessarily good. People do not seem to understand that COE prices after 2010 are probably too high only because the prices from 2005 to 2008 were probably far too low.

There is a difference between discussing the COE price and government intervention. The commentary does discuss the latter.

There appears to have been a lack of policy coordination as well as a poor understanding of the consequences of policy actions.

But the greatest failure boils down to the management of the growth in the car population. The formula for deciding the allowed growth is not apparent at all. In particular, in the latter half of the 2000s, the numbers were seemingly plucked from thin air.

If we had kept car population growth to 2 per cent, COE prices would never have fallen so low, nor would they be so high now.

Bernard Tan
My own forecasts - the longer term equilibrium once the replacement cycle kicks in - you will be lucky if you can pay COE below S$50k for pax cars (irregardless of any categories). Sometimes, you simply don't know where Singaporeans made their money from...

Fall in COE prices drives crowds to car showrooms

Car dealers noted the strong demand from the cash rich, who are hoping to get more bang for their buck by shopping for bigger cars. Photo: Ernest Chua
Premiums unlikely to return to previous heights, those for big cars set to rebound, say dealers
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SINGAPORE — Prospective buyers returned in droves to car showrooms over the last two weekends, following a sharp dip in Certificate of Entitlement (COE) premiums earlier this month as a result of new restrictions on car loans and increase in taxes for bigger cars.

Car dealers TODAY spoke to expect the premiums for bigger cars to rebound in the next bidding exercise, which will close on Wednesday. Nevertheless, over the longer term, they do not expect COE premiums to hit previous heights.

While the restrictions imposed by the authorities would remove a segment of the demand — such as from young professionals and young families — the car dealers noted the strong demand from the cash rich, who would now be hoping to get more bang for their buck by shopping for bigger cars that might have previously been beyond their reach.

On March 13, COE premiums for Category B (cars 1,601cc and above) fell by 37.3 per cent to S$58,090. Premiums for Category A (cars 1,600cc and below) fell 4.6 per cent to S$74,686. In the Open category, where COEs can be used for any vehicle type but are commonly used for bigger cars, premiums fell by 29.3 per cent to S$65,001.

“Traditionally, fluctuations in COE prices have always attracted customers, most of whom are bargain hunters, to the showrooms,” said a dealer who declined to be named. Another added that recently, the majority of his company’s customers have been interested in bigger cars.

Mr Ron Lim, General Manager of Tan Chong Motor, felt that Category A premiums could fall this time — but not as drastically as Category B premiums in the previous bidding exercise. “I would estimate the premiums for both categories to be around mid-S$60,000, about where the ones for the Open Category ended in the last bidding. Due to the slashing of prices by dealers ... they can’t bid as high as they could in the past.”

The quirk that saw premiums of bigger cars falling below that of small cars could continue, Mr Lim said. Nevertheless, he expects the difference to be narrowed to between S$1,000 and S$2,000. Mr Eddie Loo, Managing Director of CarTimes, however, estimates that COE premium for Category B would be “above S$60,000, even close to S$70,000”, while COE premium for Category A would fall but still remain “above S$60,000”.

Industry veteran Neo Nam Heng noted that while car dealers had slashed prices by S$20,000 to S$30,000 in the immediate aftermath of the measures, many have raised prices in the last few days because of brisk sales. He estimates the premiums for both Category A and B to be about S$50,000 to S$60,000 in the coming bidding exercise.

When this reporter visited the car showrooms along Leng Kee Road yesterday, most were crowded with prospective car buyers. However, several of those whom TODAY spoke to were not planning to buy a car any time soon.

Mr Bryan Lee, 35, a civil servant, said he was drawn to the showrooms by the newspaper advertisements but wanted to wait “a couple of months” for COE premiums to stabilise.

“I do not see this as a good time to go into the market as it is all too unpredictable,” said Mr Lee, whose current car is eight years old.
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