: Value Investing Forum - Singapore, Hong Kong, U.S.

Full Version: Car loan curbs: What were they meant to achieve?
You're currently viewing a stripped down version of our content. View the full version with proper formatting.
Pages: 1 2 3
(06-03-2013, 12:54 PM)RBM Wrote: [ -> ]Interesting article from cnbc attached below – written from a US perspective I think. Note the criticism that Singapore’s public transport system comes in for and the comparisons with automobile prices in the UK and the US……..………

old Andy Siew, a personal trainer with a monthly household income of S$12,000 (US$9,650). "Any couple earning within that region cannot afford to buy a new car right now.
Singapore boasts of world class infrastructure but as the city has grown from 4.2 million to 5.3 million in just 10 years, it has led to overcrowding in trains, buses and on the roads. The government plans to boost the city's public transportation system to encourage less people to drive, but analysts said until those increased services become available, it will impact people's mobility. According to Arora, Singapore does not offer the kind of alternate public transport that is available in other parts of the world like Tokyo where you can implement such kind of highly restrictive policies. "Our transport system is not exactly that good, the infrastructure is not catering to us right now," Siew, who lives in Singapore's northeastern suburb, said. "The trains and buses are not on time, and taxis are so difficult to find sometimes, especially, on rainy days and peak hours."

—By's Rajeshni Naidu-Ghelani

These kind of comments are becoming more common in world media. But our leaders are just turning a blind eye to these comments.
It seems big G has a selective vision just see what you want to see & ignore everything else as just that.
Will the scheme cost more grief to the middle income class? The drop in Coe comes from the bigger car and the smaller cars experienced a surge in demand as the rich switch to smaller cars?
Any couple earning within that region cannot afford to buy a new car right now

I feel that more likely it is "Any couple earning within that region but have been over extending themselves cannot afford to buy a new car right now"
The article is a little flawed. Why can't a couple earning $12,000 a month comfortably afford a small car? Does this imply that even with this kind of earning power they do not even have $50,000 or $60,000 cash to put as down-payment? Huh
(06-03-2013, 03:06 PM)Musicwhiz Wrote: [ -> ]The article is a little flawed. Why can't a couple earning $12,000 a month comfortably afford a small car? Does this imply that even with this kind of earning power they do not even have $50,000 or $60,000 cash to put as down-payment? Huh

Totally agree.

Sometimes I just can't help but wonder why is there heated arguments over the car curb policy? If the arguments are about life hard to get by because people can't even afford a bowl of rice, I can understand. But cars?

If people really need a car for a living and it is a need to them, I am sure they will be able to find ways to get their needs. Just like what we are doing everyday. Working for 3 meals a day.

Humans are creatures with a strong will to live. We will struggle for air even if we are drowning. If a car is as important as food and air, we will do everything within our means to get one.

If this is not Singapore- a tiny red dot on the map and yet the policy makers are curbing car supply without the support of a transport system, it is not difficult to understand the dissatisfaction of the people.

But this is Singapore. How inconvenient is it to travel from point to point? How challenging is it to plan for your next day journey by arranging with the cab company?

I always believe it's all about making choices. We do know there are alternatives that we can take but we refused to do so and that's where all the lamenting begins.

There are heated debates of car curbing policy because we are not deprived of the most basic necessities of life. If we are, we will not be discussing such topics here.
a couple earning 12kpm may have such expenses which depletes their ability to save: housing installments, monthly maintenance to parents, kids tuition n other expenses, vacation expenses n liking forvexpensive stuff such as watches, pens, bags etc n donation to charities n churches. i believe some if not all are really relantvexpenses in today day n age. dun say 12kpm, even 25kpm also same sort of issue...
take bicycle... no bicycle lane... risk of knocking down by cars
take footwalk... no shelter from the heaty sun & speedy impatient traffice flow
take cars... suffer loans restriction and jams and burn pocket
IMHO, quite a number of the arguments raised make no sense. But it maybe more productive to look at the impact from an investment viewpoint rather than debate the rationale.

My analysis of the situation is as follows:

a. The car population is limited by the number of COEs which is based on the allowed growth of car population and scrap rate.
b. It therefore follows that the new measures is a zero sum game i.e. the TOTAL NUMBER of cars on the road stays the same.
c. What the new measures do is it SHIFTS the supply and demand equations i.e. the supply will shift in favour of the lower OMV cars while the demand shifts in favour of buyers with cash in hand.

As second order side effects:

a. The government's take with COE and ARF fees would in all likelihood go down (ARF up slightly but COE down quite a bit).
b. As COE falls, for a certain category of car owners there maybe more incentive to scrap one's existing car and buy a new one so the average car on the road will probably be newer than what it would have been under the old regime (this impacts Vicom inspection fees for those of us who are invested in it and maybe better sales for new cars which impact companies like WBL).
c. The used car companies that were caught holding sizeable stock have just had a fairly significant wealth shock event.

As a key takeaway - may want to scrutiny scrap rates for potential impact on Vicom and to buy a relatively new old car if you want to take advantage of the situation Angel.

You definitely make a lot more sense than the silly CNBC article! Especially on your point on COE.

Incidentally, less than 45% of Singaporean households own a car, i.e. more Singaporeans do not own a car. So mentioning average Singaporean and car certainly does not jive...
Actually, the more updated number is about 1 in 2 households owns a car - i.e. about 50%. Data taken from web site
Pages: 1 2 3