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I thought this was more interesting.


If the used car businessmen were doing an honest trade and are hit by the loan restrictions, they have my sympathies. But I confess to finding it difficult to do so when things like this are happening.
The Straits Times
Published on Mar 30, 2013
A quiet Good Friday at car showrooms

By Walter Sim

CAR shoppers were expected to flock to showrooms this weekend to take advantage of the recent drop in certificate of entitlement (COE) prices for small cars.

But Good Friday was noticeably quieter on the Leng Kee Road stretch when The Straits Times visited yesterday afternoon, compared to two weekends ago. Then, the Government's drastic car loan curbs and introduction of a tiered tax system saw big car COEs tumble and dealers report sales up to three times the average.

In the latest tender which closed on Wednesday, premiums for cars up to 1,600cc fell by 14 per cent to a six-month low of $64,209. Conversely, premiums for cars above 1,600cc soared by 27.2 per cent to $73,900.

An employee at BMW agent Performance Motors, who declined to be named, said it was "like a fish market the last couple of weeks", adding: "But as you can see it is not as busy today."

Big cars such as the BMW 5 series and Audi A6 continue to be popular. Pilot Sanjay Kaushik, 47, who was looking for a big car, said: "Even though they are not as cheap as two weeks ago, the big cars remain appealing as the COE prices are still much lower than they were just 1½ months ago."

In February, COE prices for big cars hit $92,667.

One factor that could have contributed to the smaller crowds was the afternoon downpour. A banker who wanted to be known only as Michael, 40, said: "I was waiting for the rain to subside so I could go for a test drive. With lower visibility in the rain, I won't be able to get a proper feel of the vehicle."

Brands reporting "healthy" foot traffic attributed it to newly released models, such as the Nissan Sylphy sedan and the Porsche Cayman, or roadshows such as Volvo's at VivoCity.

Mr Victor Kwan, managing director at Volvo agent Wearnes Automotive, said 70 per cent of cars sold yesterday were small, reversing last weekend's trend. He said: "The overall car buying interest is still there. It should still be better than an average weekend."
The Straits Times
Published on Apr 06, 2013
Restrictions on used-car loans lifted for 60 days

Reprieve applies to cars in stock before Feb 25; MAS also plugs loan loophole

By Christopher Tan Senior Transport Correspondent

LOAN restrictions on some used cars have been suspended for 60 days from today.

The Monetary Authority of Singapore (MAS) eased its curbs on vehicles that were in stock or acquired before Feb 25, when the restrictions were announced, after repeated appeals by hard-pressed traders.

It has also acted to plug a loophole by altering regulations to cover lenders not previously governed by them.

In a statement yesterday, the MAS said: "The inventory of used cars acquired by dealers at relatively high certificate of entitlement (COE) values before the introduction of the financing restrictions has made it particularly challenging for them to adjust to the new market conditions.

"Demand has also fallen more sharply in the used-car market compared to that for new cars."

The curbs limit car loans to no more than 60 per cent of the purchase price and a tenure of not more than five years.

The Singapore Vehicle Traders Association (SVTA) had made several appeals to the Government, including one to Prime Minister Lee Hsien Loong.

The MAS convened an urgent meeting with the SVTA yesterday to announce the 60-day reprieve.

But SVTA secretary Raymond Tang said: "Sixty days not enough. If they want to give, they might as well give a longer period. Consumers also can't adjust in time now." Cosmo Automobiles' managing director Eugene Chng said: "Whether 60 days is long enough to clear our stock, we really don't know. But any sort of help is good for now. The past month has been hell. This will give us some breathing space."

He said he sold 25 cars last month, but at a loss of about $300,000. The loan curbs had forced him to cut prices for each car by an average of 20 per cent.

The MAS estimates that traders have fewer than 7,000 used cars which were in stock before the curbs kicked in.

"Based on trends in purchases of used cars... it is expected that much of this inventory can be cleared within a period of two months," the central bank said.

New rules governing car-loan providers not under the scope of the MAS also kick in today.

The Ministry of Trade and Industry has amended the Hire Purchase Act so that lenders such as credit firms and financiers owned by carmakers face the same curbs slapped on banks and finance houses in February.

The Ministry of Law has likewise made revisions to ensure moneylenders follow the curbs for both car and housing loans.

Mr Gerry de Silva, spokesman for leading car-loan provider Hong Leong Finance, called the move to plug the loopholes "superb". He said: "We welcome this fair action by the Government."

But Moneylenders' Association of Singapore president David Poh said customers can still take out personal loans which are not restricted. Interest rates for these, however, start from 20 per cent per annum, versus 1.88 per cent for car loans from banks.

Car trader and credit broker Anthony Lim said car-loan interest rates will continue to be soft because "everybody is on a level playing field now".

He said used-car prices should also continue to slide because dealers have to clear several thousand cars within 60 days. In turn, this will depress trade-in prices, new car prices and COE premiums.

Additional reporting by Royston Sim
Seems quite a few people make owning a car their dream....

The Straits Times
Published on Apr 07, 2013
Interest in used cars returns - for now

Buyers flock to dealerships after MAS suspends loan curbs for 60 days

By Jermyn Chow

Sales are picking up for used-car dealers, a day after the Government temporarily suspended its loan restrictions on some second-hand vehicles.

More people turned up at used-car centres across the island, hoping for a good deal.

Used-car dealerships in Turf City, Commonwealth and Ubi told The Sunday Times that the number of shoppers rose by at least 50 per cent. And they were not just browsing.

A check with 10 dealers found that they sold between one and three cars yesterday, a far cry from a month ago when sales all but dried up despite some sellers slashing prices by a third.

Cosmo Automobiles' managing director, Mr Eugene Chng, who sold two cars yesterday, said: "It is better than nothing; at least people are coming."

The temporary reprieve came after repeated appeals by hard-pressed traders to the Monetary Authority of Singapore (MAS) to hold off the loan curbs on used cars bought by dealers before Feb 26, when the new restrictions kicked in. The curbs limit car loans to no more than 60 per cent of the purchase price. The loan tenure also cannot go beyond five years.

Yesterday, MAS suspended the curbs for 60 days but the reprieve only applies to fewer than 7,000 used cars, which were in stock before Feb 26.

Despite the higher interest in his cars, Mr Chng ruled out any price hikes because he wants to sell off his stock. "You only have a 60-day window of opportunity. I don't want to play with fire and risk bigger losses," said the dealer, who has already lost $300,000 when he sold his 25 cars last month for less than what he paid for them.

Mr Eddie Loo, managing director of used-car trader CarTimes Automobile, is also hoping to sell off the 37 cars in his old stock within the next two months. He is looking at alternative plans to stay afloat as well once the curbs hit again.

Mr Loo, who is also the vice- president of the Singapore Vehicle Traders Association, is mulling options like down-sizing showrooms or expanding the parallel import of new cars.

He also said that the industry is facing an uncertain future. "People (car owners) will have to get used to the new normal of selling their cars at a lower price," he added, because traders will find it tough to find buyers for them due to the loan curbs.

Ms Lee Bee Wah (Nee Soon GRC) was one of several MPs who raised the plight of used-car dealers during last month's Budget debate.

When contacted yesterday, she said: "We understand the need to curb the growth of cars and impose financial prudence but I'm happy that the Government is willing to listen to feedback and flexible enough to do something to lessen the pain of car traders."

Engineer Simon Lim is hoping to get a five-year-old Honda or Mazda without stumping up more than $10,000 upfront.

The 34-year-old, who is likely to get a 70 per cent loan for his car, said: "I thought I had to stick with public transport for a few more years and save up more, but it looks like I can fulfil my dream to own a car very soon."
The Straits Times
Published on Apr 11, 2013
Small-car COE premium falls to 9-month low

By Christopher Tan Senior Transport Correspondent

THE certificate of entitlement (COE) price for smaller cars continued to head south at the latest tender yesterday - the third consecutive drop for the category since market-cooling measures kicked in in February.

The premium for cars up to 1,600cc ended 5 per cent lower at $61,029 - a nine-month low.

For cars above 1,600cc, the COE premium chalked the biggest drop of 9.3 per cent to end at $67,010. That, however, was higher than the $58,090 posted two tenders ago.

The price for Open COEs, which can be used for any vehicle type but ends up mainly for bigger cars, finished 8.6 per cent lower at $66,989. Motorists must obtain a COE which they bid for at auctions before they can own a vehicle in Singapore.

For motorcycles, the premium slid by 5.1 per cent to close at $1,812.

The commercial vehicle COE premium bucked the trend by closing 3.5 per cent higher at $56,011 on the back of strong demand.

Mr Michael Wong, general manager of Isuzu agent Triangle Auto, said demand for vehicles such as trucks and concrete carriers is being fuelled by a slew of infrastructure projects, including the Downtown MRT line and widening of the Pan-Island Expressway.

The motor industry attributed the falling car premiums partly to a 60-day reprieve on loan curbs for used cars which may have diverted demand to second-hand vehicles over the weekend.

Mr Chin Kee Min, senior manager of Kia distributor Cycle & Carriage Kia, said: "It is possible that some of the focus might have shifted to used cars."

Mr Chin said the car market is "so small these days" that any minor shift in consumer pattern can result in a shift in prices.

The Government announced last Friday that new rules restricting car loans to no more than 60 per cent of purchase price and repayment period of no longer than five years have been suspended for used cars. The 60-day reprieve is only for vehicles obtained before the curbs were announced on Feb 25.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said traders may have tempered their bids in anticipation of demand cooling further as the loan curbs and heftier taxes for premium and luxury cars sink in.

Loopholes exploited by lenders not governed by the Monetary Authority of Singapore have also been plugged.

"It is still too early to say how much demand will shrink," Mr Lim said, but added that COE premiums are unlikely to fall below $50,000 unless supply grows.

Industry watchers, meanwhile, noted that consumers who bought a new car in January when COEs were above $90,000 had already suffered a $30,000 devaluation in three months.
The Straits Times
Published on Apr 12, 2013
Car dealers slash prices, expecting lower COE rates

Some have cut rebate levels; demand also likely to drop

By Royston Sim

CAR dealers expect certificate of entitlement (COE) premiums to head further south in the near future, which could push down prices of vehicles even more.

Many have already reacted to the latest COE tender on Wednesday, which saw premiums drop by up to 9.3 per cent.

The Nissan Sylphy now costs $102,800, down from $105,800, for example. Tan Chong Motor has also slashed the price of its larger cars by $7,000. Volkswagen cut the price of its cars above 1,600cc by up to $5,500.

Some dealers have also lowered their rebate levels, a sign that they expect COE prices to go down further.

Honda agent Kah Motor revised its rebate for smaller cars to $49,000, down from $52,000 two weeks ago. Meanwhile, Toyota agent Borneo Motors cut its rebate for bigger cars by $10,000.

A buyer will get back the difference if the COE premium comes in below the rebate level.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, believes demand for cars could also decrease as the full impact of government loan curbs kick in.

"The expectation is that COE premiums will soften, so no dealer will bid aggressively in case it affects his margins."

Two months ago, the maximum loan for a car was cut from 100 per cent of the purchase price to 50 per cent or 60 per cent, while the tenure was reduced from 10 years to five.

Last week, the Government also closed off loopholes by making sure that the curbs apply not just to bank loans, but also those offered by credit companies and moneylenders.

The impact continues to be felt. The premium for smaller cars up to 1,600cc dropped for the third consecutive time on Wednesday, ending 5 per cent lower at $61,029. COE prices for bigger cars above 1,600cc dropped by 9.3 per cent to end at $67,010.

Industry observers expect premiums to stabilise only after a few more bidding exercises. A sales manager, who declined to be named, at one of the dealerships here also pointed out that many customers who visit the showroom are not committing to a purchase, preferring instead to wait.

Mr Andy Koh, 42, who works in the finance industry, has been looking to buy a new car to replace his eight-year-old BMW 3-series. He is now waiting to see if prices fall further. "There's a lot of uncertainty over COE prices, but people are hoping they will stabilise downwards."

Still, Mr Lim doubts premiums will drop below $50,000 as the supply of COEs is still at an all-time low.
Whether the COE will continue to drop depends on the supply and demand of the market.

Demand is being curbed with the higher loan downpayment for new cars, the chances of COE to continue to fall is more likely.
Straits Times is doing a survey on "Is a Car Really a Necessity"? They are asking people to comment thru Facebook and they will feature replies and opinions in their weekend section.

This should be interesting - I wonder how many actually will hold the view that a car is a necessity.

Judging from the hoards of people thronging used car showrooms since the 60-day relaxation of the 100% financing rule, I guess a lot of them feel this way? Tongue
Hi, MW, many young couples with young children in Singapore feel that a car is a necessity. You are among the sane minority who feels otherwise. What adjustment do you have to make without a car?
I have a 5 month old son, my second child, who is under the care of my mother in law and we stay in the same estate. Instead of having to get my wife to take a bus (20-30min including walking, waiting) or taxi (10min if you can get one, waiting time uncertain) to my in law's place in the morning, she has decided to sleep at my in law's place every night before a working day. I take care of my elder daughter and we sleep at our own home which is nearer the train station and we commute by train to my daughter's childcare and my workplace. This is still workable for 2 children, but if I do have 4, I may need to think of more drastic measures like shifting house to within short walking distance of my inlaws.
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