Porsche tying up with Hong Leong to offer car loans

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2,500 Porsches on the road now, wow. The number of rich has increased nearly 5-fold! Or are they all paying huge loans? Tongue

The Straits Times
Jan 12, 2012
Porsche tying up with Hong Leong to offer car loans

By Christopher Tan

THE financing arm of German sports car maker Porsche is teaming up with Hong Leong Finance to capture a slice of the high-value car loan business.

The move is driven by Singapore's high-octane luxury car market, which has seen record-breaking sales of rarefied brands in recent years.

The Straits Times understands that the two parties will ink an agreement today at the launch of Porsche's latest 911 model at the Ritz-Carlton, Millenia Singapore.

It is Porsche Financial Services' first foray into the South-east Asian market, and the first such tie-up for Hong Leong Finance, Singapore's largest consumer loan player with shareholder funds of $1.55 billion and deposits in excess of $7.18 billion.

Observers said the move reflects the growing prominence of the luxury car market in Singapore. Although tiny by any measure, the market has witnessed premium brands garnering record sales.

For instance, 567 Porsches were sold last year as of end-November, compared with 448 in 2010 and 303 in 2009.

The marque's market share stood at 2.2 per cent - higher than those of mass-market brands such as Suzuki, Mazda and Subaru.

Conquest sales have largely been made on the backs of models like the Cayenne sport utility vehicle and Panamera saloon - new segments for the manufacturer which is best known for its speedy coupes and cabriolets.

The arrival of the new 911 - an iconic model that has an unwavering following - is likely to propel sales further, as would a new Boxster later this year.

The German marque is also planning to enter two new segments: a high-end product to go head to head with the likes of Ferrari and Lamborghini and an entry-level model positioned below the Cayman and Boxster.

The new business is seen as an opportunity for Hong Leong Finance to enter the high-end loan segment, deemed by industry players as both lucrative and safe given its extremely low default rate.

Sources said the joint venture will kick off with a flexible scheme to make the owning of a Porsche more affordable and hassle-free.

Buyers can take up a loan over a fixed tenure of three or four years. Porsche will buy back the car at an amount pegged to the outstanding loan value.

If the prevailing resale value of the car is higher at the time, the customer is free to sell it elsewhere.

The interest rate for instalment payments is at market rates - 1.88 per cent.

The plan - open to used Porsches as well - is technically a balloon scheme with a buyback clause, but it works like a leasing plan. It is targeted at consumers who are averse to the uncertainties of resale values.

Porsche 911 owner Trina Liang said the scheme is 'definitely a plus'.

'It would make people think about buying a Porsche instead of, say, a Maserati,' the 41-year-old who works in the financial industry added.

'It's a positive thing.'

The Porsche move follows earlier entries by the financial service arms of Daimler, Volkswagen and BMW.

There are about 2,500 Porsches on the road in Singapore now, compared with 540 in 2000.
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