WEEKEND OF CHEER FOR CAR DEALERS
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Neo Chai Chin
chaichin@mediacorp.com.sg
IT WAS not just a case of window-shopping at car showrooms this past weekend. The crowds that descended after last week's historic $2 Certificate of Entitlement (COE) premium for small cars were keen enough that auto dealers finally had brisk business — racking up a 400 per cent increase in sales, at least in one instance — after the quiet of recent weeks.
More than 50 Chery cars were sold, said Mr Walter Koh, sales manager of Vertex Automobile, the distributor for the Chinese automobile brand. Vertex normally sells eight to 10 cars on weekends, but on Saturday and Sunday, its 20-odd salesmen were all kept busy.
Mitsubishi distributor Cycle & Carriage's sales "more than doubled", as showroom visitorship tripled, said Ms Loh Shurn Lin, Mitsubishi's marketing manager. The brand's smaller cars such as the 1.5-litre Lancer EX and 1.6l Lancer GLX were the top sellers.
While sales figures from Nissan and Toyota car distributors were unavailable, other dealers said buyers were keen to take advantage of car prices that had been cut by $4,000 to $10,000.
"People know they can get better deals now," said Fiat's marketing
manager Brandon Ong, adding that its sales shot up by 30 per cent.
One customer even joked about fishing out $5 to buy two COEs, related Vertex's Mr Koh. But the deal is not that sweet. Some showroom visitors were unaware that the $2 COEs were "yesterday's news", as one dealer put it. Those who bought cars over the weekend would likely have missed out on the $2 COEs and would have to make fresh bids, which some predict would see COEs for cars below 1,600cc bounce back to $8,000 to $10,000 levels.
While the auto dealers said there is "potential" for more buyers to bite, they cited two factors that could dampen interest — whether COE prices rebound and buyers can secure bank loans for their new purchases. Though banks are cautious about lending in the current economic climate, Vertex's Mr Koh felt that loans would be easier to come by for first-time buyers and those purchasing a second or third car. But drivers hoping to trade in their existing cars for new ones could face a situation where their outstanding loans would be higher than the paper value of their cars, leaving them out of pocket.
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TODAY, Thursday, 20th November, 2008
$2 FOR SMALL CARS
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Historic low reflects soft car market, uncertain economic climate: Motor traders
Leong Wee Keat
weekeat@mediacorp.com.sg
WITH barely three minutes left to the close of yesterday's bidding, Certificate of Entitlement (COE) prices for small cars was $1. As bidding closed at 4pm, premiums inched up to $2 — still a stunning, historic low. That it happened in an 'open' bidding system, where bids can be monitored 'live', underscores three things, say motor traders: The car market has gone soft; there are too many COEs; and the economic uncertainty has grown sharply. The number of bids for small cars (Category A) was 1,852 — one more than the quota on offer. Just two weeks ago, prices for this category closed at $10,455, with 2,049 bids for the 1,848 COEs available then.
Yesterday, premiums fell in all categories. Prices for large cars (above 1,600cc) fell by 41 per cent, from $8,301 earlier this month to $4,889. In the Open Category, used mainly for cars, the drop was 34 per cent, from $10,490 to $6,889. In the goods vehicles and buses category, prices now stand at $6,189 compared to $8,889 and for motorcycles, at $1,012 from $1,509. The lower prices, especially for small cars, are unlikely to benefit car buyers in the long term, though, said Singapore Vehicle Traders Association president Neo Nam Heng.
Successful bidders will find it hard to sell their cars or otherwise face lower resale values, as the rebate paid out when a vehicle is deregistered before expiry of the COE is pro-rated to the Quota Premium. The last time COE prices plunged to rock bottom was last year, in the goods vehicles and buses category, where the premium stayed at $1 for five consecutive tenders after a new emissions requirement affected the supply of new models. For cars, the previous historic low was in December 1997, when the Asian financial crisis started, and premiums for big cars fell to $50. That was when COE bidding was conducted in a closed tender system in which bidders could not see the prevailing rate of other bids. The $50 COE was then
described as "just a fluke" and COE prices bounced back to previous levels. The last time the COE price plunged in the small car category — to $101 — was in 2001.
Will low prices for small cars continue over the next few months? Motor traders Today spoke to expect prices to rebound. Still, there is the possibility that non-car owners may be enticed by the low COE prices, said Group Exklusiv executive director Kevin Kwee. "They were prudent before but they may consider (an entry-level car) now," he said.
But with the reduction in the allowed vehicle growth rate taking effect in May, which would reduce the number of COEs available, there may be only a small window of opportunity.
"What happened (yesterday) is historic," said Mr Neo. "But it also goes to
show how weak the marketsentiment is."
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