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PR Newswire
03-12-2011, 08:18 AM
More luxury cars on the streets soon - making more heads turn in envy! And.....making the rich-poor gap even wider! 
The Straits Times
Dec 3, 2011
High-end cars winning market race
Higher COE prices and tighter supply help drive up sales
By Christopher Tan
PREMIUM brands are expected to account for more than half of new car sales next year as the certificate of entitlement (COE) supply shrinks to an all-time low and prices remain high.
Already, these brands, ranging from BMW, Mercedes-Benz and Audi to Porsche, Ferrari, Lamborghini and Rolls-Royce, are poised to garner about 46 per cent of sales this year.
This is up from 33 per cent last year and below 10 per cent in the past several decades.
Audi Singapore managing director Reinhold Carl predicted: 'The premium brands will account for more than half of new car sales next year.'
He based his projection on the back of COE supply contracting further - an event most motor companies are bracing themselves for.
The industry is expecting next year's supply to shrink to between 26,000 and 28,000, from around 30,000 this year, 42,000 last year and an average of 100,000 a year between 2004 and 2008.
There are two factors behind the supply squeeze.
One is the Government lowering the annual allowable vehicle population growth rate to 0.5 per cent from next August, from 1.5 per cent today and 3 per cent before 2009. The other is a slowdown in the number of cars scrapped.
The latter is the bigger influence on the supply of COEs, which consumers must secure at fortnightly auctions before they can own a vehicle.
Because of the constricted supply, COE prices have soared to more than $50,000 for cars up to 1,600cc and more than $70,000 for bigger models.
While COE prices have touched and briefly breached these levels in the 1990s, observers reckon they are likely to defy gravity for a longer period this time round, given the two factors.
And, they said, high COE prices tend to favour sales of higher-end cars over mass market ones like Toyotas and Hyundais.
Mr David Ting, deputy editor of motoring magazine Torque, said this was because buyers and sellers of premium makes are 'better able to stomach expensive COEs than those of mass market brands'.
Also, an average Japanese 1,600cc car is now more than $100,000 - a price deemed prohibitive to many buyers.
Mr Ting added that the German brands - which corner the premium segment - have also expanded their model range, lowered their prices and invested more on advertising and marketing to fuel sales.
The confluence of these efforts and a tight COE supply have helped the German makes overtake the Japanese brands, which have dominated the Singapore market since the 1980s.
'I think this might be the 'new normal' going forward,' Mr Ting said.
As a sign of how vastly things have changed, Toyota, which was the bestseller from 2002 to last year, is likely to slip to No.3 this year.
The 'new normal' has led to a market shake-up.
Already, the Mazda and Opel dealerships have changed hands this year, while entrepreneur Peter Kwee has suspended his China car business and sold his Kampong Ubi showroom, which housed Geely and other Chinese franchises.
Cycle & Carriage has farmed out its Mitsubishi sales operations to sub-dealer Fulco, and several other motor firms, from Toyota agent Borneo Motors to Honda's Kah Motor, have laid off hundreds of employees.
Against this backdrop, fears of an economic slowdown are growing. On this front, even BMW - this year's bestseller with 4,009 cars sold in the first 10 months - is cautiously optimistic.
BMW Asia managing director Neil Fiorentinos said: 'With what is happening in Europe, the writing is on the wall - 2012 will be a more difficult year than 2011. Customers are delaying buying decisions. They have become a bit more conservative.'
Even so, he expects the premium brands to maintain their market share. With the new BMW 3-series arriving next year, observers reckon BMW is likely to maintain its pole position.
Audi's Mr Carl expects competition in the high-end segment to intensify. He said Audi will have to be mindful that its dealer margins are not eroded further because of competition.
Meanwhile, consumers and businesses are feeling the pinch of soaring vehicle prices. Mr Charlie Kok, managing director of a logistics firm, said: 'The cost of living in Singapore has already gone up a lot. Transport is a major component.'
christan@sph.com.sg
The Straits Times
Dec 3, 2011
High-end cars winning market race
Higher COE prices and tighter supply help drive up sales
By Christopher Tan
PREMIUM brands are expected to account for more than half of new car sales next year as the certificate of entitlement (COE) supply shrinks to an all-time low and prices remain high.
Already, these brands, ranging from BMW, Mercedes-Benz and Audi to Porsche, Ferrari, Lamborghini and Rolls-Royce, are poised to garner about 46 per cent of sales this year.
This is up from 33 per cent last year and below 10 per cent in the past several decades.
Audi Singapore managing director Reinhold Carl predicted: 'The premium brands will account for more than half of new car sales next year.'
He based his projection on the back of COE supply contracting further - an event most motor companies are bracing themselves for.
The industry is expecting next year's supply to shrink to between 26,000 and 28,000, from around 30,000 this year, 42,000 last year and an average of 100,000 a year between 2004 and 2008.
There are two factors behind the supply squeeze.
One is the Government lowering the annual allowable vehicle population growth rate to 0.5 per cent from next August, from 1.5 per cent today and 3 per cent before 2009. The other is a slowdown in the number of cars scrapped.
The latter is the bigger influence on the supply of COEs, which consumers must secure at fortnightly auctions before they can own a vehicle.
Because of the constricted supply, COE prices have soared to more than $50,000 for cars up to 1,600cc and more than $70,000 for bigger models.
While COE prices have touched and briefly breached these levels in the 1990s, observers reckon they are likely to defy gravity for a longer period this time round, given the two factors.
And, they said, high COE prices tend to favour sales of higher-end cars over mass market ones like Toyotas and Hyundais.
Mr David Ting, deputy editor of motoring magazine Torque, said this was because buyers and sellers of premium makes are 'better able to stomach expensive COEs than those of mass market brands'.
Also, an average Japanese 1,600cc car is now more than $100,000 - a price deemed prohibitive to many buyers.
Mr Ting added that the German brands - which corner the premium segment - have also expanded their model range, lowered their prices and invested more on advertising and marketing to fuel sales.
The confluence of these efforts and a tight COE supply have helped the German makes overtake the Japanese brands, which have dominated the Singapore market since the 1980s.
'I think this might be the 'new normal' going forward,' Mr Ting said.
As a sign of how vastly things have changed, Toyota, which was the bestseller from 2002 to last year, is likely to slip to No.3 this year.
The 'new normal' has led to a market shake-up.
Already, the Mazda and Opel dealerships have changed hands this year, while entrepreneur Peter Kwee has suspended his China car business and sold his Kampong Ubi showroom, which housed Geely and other Chinese franchises.
Cycle & Carriage has farmed out its Mitsubishi sales operations to sub-dealer Fulco, and several other motor firms, from Toyota agent Borneo Motors to Honda's Kah Motor, have laid off hundreds of employees.
Against this backdrop, fears of an economic slowdown are growing. On this front, even BMW - this year's bestseller with 4,009 cars sold in the first 10 months - is cautiously optimistic.
BMW Asia managing director Neil Fiorentinos said: 'With what is happening in Europe, the writing is on the wall - 2012 will be a more difficult year than 2011. Customers are delaying buying decisions. They have become a bit more conservative.'
Even so, he expects the premium brands to maintain their market share. With the new BMW 3-series arriving next year, observers reckon BMW is likely to maintain its pole position.
Audi's Mr Carl expects competition in the high-end segment to intensify. He said Audi will have to be mindful that its dealer margins are not eroded further because of competition.
Meanwhile, consumers and businesses are feeling the pinch of soaring vehicle prices. Mr Charlie Kok, managing director of a logistics firm, said: 'The cost of living in Singapore has already gone up a lot. Transport is a major component.'
christan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/