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PR Newswire
09-12-2010, 08:33 AM
The major high-end car dealers are the main culprits here. They have been pushing hard to secure more new car bookings during this festive period, and now the cars have arrived and due for registration and delivery, and they have to scramble for COEs at a time when the total number has been cut.
Such a sharp rise in COE prices and such high COE prices are going to be disruptive to the bigger used car market -
1. 2nd-hand car dealers get a chance to make some extra profits in the short term on those cars in their current inventory - that's provided if they can find buyers for them.
2. Many prospective buyers of used cars will be at a loss - to buy now or postpone the purchase?; to downgrade to a smaller or cheaper car?; to put up more money (taken from savings) or to borrow more to pay for the purchase?
3. Car financiers will be taking on a bigger risk - as most car buyers will need to borrow a bigger loan quantum or on a longer term now; the market value of cars as the financiers' collateral will have a higher degree of price volatility risk; and potential loss on the new car loans written at the current higher COE prices may become a problem if and when COE prices have a sharp correction in the future.
It seems the only winner is LTA - the master behind the clever COE Scheme used as a tool to govern and interfere with the free market as well as bringing in an enormous amount of tax revenue - mostly financed by the banking system.
Such a sharp rise in COE prices and such high COE prices are going to be disruptive to the bigger used car market -
1. 2nd-hand car dealers get a chance to make some extra profits in the short term on those cars in their current inventory - that's provided if they can find buyers for them.
2. Many prospective buyers of used cars will be at a loss - to buy now or postpone the purchase?; to downgrade to a smaller or cheaper car?; to put up more money (taken from savings) or to borrow more to pay for the purchase?
3. Car financiers will be taking on a bigger risk - as most car buyers will need to borrow a bigger loan quantum or on a longer term now; the market value of cars as the financiers' collateral will have a higher degree of price volatility risk; and potential loss on the new car loans written at the current higher COE prices may become a problem if and when COE prices have a sharp correction in the future.
It seems the only winner is LTA - the master behind the clever COE Scheme used as a tool to govern and interfere with the free market as well as bringing in an enormous amount of tax revenue - mostly financed by the banking system.