BMW takes No. 1 spot in half-year sales

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Oh wow! This officially proves that Singaporeans are all filthy rich! How can one afford a BMW easily? Simple, just cough up $150,000 or more! Big Grin

Jul 14, 2011
BMW takes No. 1 spot in half-year sales

Costly cars forge ahead, driven by high COE prices
By Christopher Tan, Senior Correspondent

BMW has pulled ahead of all other car brands to emerge as Singapore's bestseller in the first half, and given its wide lead over Toyota, the German marque could clinch the year's top spot - its first ever.

According to data just released by the Land Transport Authority, 2,479 new BMWs were registered in the first six months - nearly 500 more than Toyota's 1,986. Arch rival Mercedes-Benz was third with 1,943 cars.

The German brands continued to dominate the top 10 list in the first half while the once mighty Japanese struggled to stay in the race amid soaring COE prices.

Certificates of entitlement - meant to limit car ownership and hence the number of vehicles on the road - are put up for bidding twice a month.

Because of a shrinking supply, COE premiums have risen to near-record levels. Premium for cars up to 1,600cc is $55,989 now and that for cars above 1,600cc is $68,501 - more than four times their respective levels just three years ago.

High COE prices dampen sales of cheaper cars with thinner profit margins because sellers are often outbid by those with fatter profits. Also, as one car dealer put it, 'wealthier buyers would not feel the higher prices as much'.

Hence, Porsche was among the top sellers this year and, up till May, was in 10th spot.

By June, it was overtaken by Volvo - but only by 12 cars. The Swedish make was among the few which managed to better its performance from the corresponding period in 2010.

Commenting on the first-half tally, Mr Say Kwee Neng, managing director of BMW agent Performance Motors, said it was too early to predict who will be No. 1 this year.

'Our numbers are encouraging but the race ends on Dec 31,' he said. 'It'd be foolish to take our competitors for granted. The second half may hold surprises for everyone in the trade. We don't know how the economy will pan out.'

Last year's race ended with Toyota taking top place (its ninth consecutive year), followed by BMW and Mercedes-Benz.

But for now, the biggest casualty by far are off-peak cars. Only 426 units were registered in the first six months - 80 per cent down from the same period last year, and merely one-tenth the figure of the year before.

High COEs have also made these cars - which can be used between 7am and 7pm on weekdays - less attractive. This is because the $17,000 tax break that comes with each car becomes a smaller saving as car prices climb.

'Our off-peak car sales have plummeted, for obvious reasons,' said a spokesman for Hyundai agent Komoco.

Squeezed out by the tight COE supply, buyers have taken a new shine to older cars. In the first six months, 34,620 used cars changed hands, up from 25,550 in the same time last year.

The figure was also higher than transactions for the whole of 2009.

Looking ahead, industry players do not expect the situation to change much in the second half.

COE supply for the next six-month period starting next month is likely to remain flat overall, with certain categories gaining and others shrinking further.

Category A (for cars up to 1,600cc) is likely to see a small quota increase but traders do not expect premiums to dip significantly.

COE supply is determined largely by the number of cars scrapped in the immediate preceding six-month period.

In the last two months, there was a minor surge in the number of 10- and 20-year-old cars taken off the road. Observers said this was because owners no longer found it worth their while to keep these cars because of high premiums.

A car's COE lasts 10 years but can be renewed for a further five to 10 years. To do so, owners must pay a prevailing quota premium, which is a three-month moving average of COE rates.

'What's most serious is the Category B (cars above 1,600cc), which we think will see a 17 per cent drop in supply,' said Mr Ron Lim, general manager of Nissan agent Tan Chong.

Traders are already bracing themselves for this premium to breach $70,000 in the next tender next week - which may set the stage for premium brands to widen the lead they have over mass-market makes.

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