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PR Newswire
07-01-2013, 07:22 AM
The Straits Times
www.straitstimes.com
Published on Jan 07, 2013
Sharp rise in older cars amid high COE prices
Just 28% of cars here less than four years old, against 80% back in 2007
By Christopher Tan senior correspondent
SOARING certificate of entitlement (COE) prices have compelled car owners to hang on to their rides longer, given the hefty cost of switching to a new model.
The result is that Singapore's car population has aged dramatically in recent years.
Back in 2007, 80 per cent of the cars on the road were less than four years old. Today, the cohort has shrunk to 28 per cent.
COE premiums are now hovering at $82,000 (for cars up to 1,600cc) and $95,000 (above 1,600cc). In 2007, they were about $14,000 and $18,000, respectively.
Premiums have spiked because the supply of car COEs - needed for the purchase of new vehicles - has shrunk from more than 100,000 in 2007 to around 27,000 last year.
Property agent Ben Ong, 61, who owns a six-year-old Nissan Latio, is among drivers who find new cars getting beyond their reach.
"I'm forced to keep it," he said. "If COE had been lower, I would have scrapped it and bought a new car."
Another car owner, retired engineer Lee Kok Meng, 56, had been looking to replace his nine-year-old Toyota Camry since last year. But because of high COE prices, he opted recently for a seven-year-old Lexus ES300.
The net result is that 65 per cent of cars here are now between four and eight years old, compared with just 13 per cent in 2007.
But not everybody is complaining. Vehicle-inspection centres are enjoying brisk business.
"As COE prices continue to climb, the number of car deregistrations every month continues to fall," said a spokesman for Vicom, the largest vehicle-inspection company here.
"This will mean an increase in the number of older cars on the road requiring annual inspections. This has been happening and we expect it will continue to happen in the months ahead."
Cars that are three to 10 years old must be certified roadworthy every two years, while older cars must be inspected annually.
The Automobile Association of Singapore is also ramping up its highway recovery services to cope with more breakdowns.
Singapore Motor Workshop Association president Joey Lim said "business is pretty good now because people are keeping their cars longer".
His own workshop, Harmony Motor, has been getting more repair, maintenance and part- replacement jobs.
But he fears circumstances may swing the other way a few years down the road.
"Come 2015, there will be another flood of COEs and premiums might plunge," he said.
Many cars will be reaching the end of their 10-year COE lifespan then. This, he said, will trigger another deluge of cars being scrapped and fewer repair jobs.
Like many in the motor trade, Mr Lim said there should be a more stable supply of COEs to prevent price fluctuations.
Retired engineer Mr Lee concurs. "They need to tweak the allocation of COEs to address the wide swing in premiums."
One way, he suggested, is to divide the car population by 10 to arrive at an average annual supply. Otherwise, there will always be peaks and troughs in the system.
Property agent Mr Ong noted: "High COE prices do not control car population growth - having a quota system already does that."
Meanwhile, Singapore is not the only place where cars are ageing. In the United States, the average age rose from 10.4 years in 2007 to 11.1 years in 2011 - largely because of the severe financial crisis in 2008.
In Japan, the average age has climbed to 6.8 years from 5.1 years over the past decade on the back of its prolonged recession.
christan@sph.com.sg
www.straitstimes.com
Published on Jan 07, 2013
Sharp rise in older cars amid high COE prices
Just 28% of cars here less than four years old, against 80% back in 2007
By Christopher Tan senior correspondent
SOARING certificate of entitlement (COE) prices have compelled car owners to hang on to their rides longer, given the hefty cost of switching to a new model.
The result is that Singapore's car population has aged dramatically in recent years.
Back in 2007, 80 per cent of the cars on the road were less than four years old. Today, the cohort has shrunk to 28 per cent.
COE premiums are now hovering at $82,000 (for cars up to 1,600cc) and $95,000 (above 1,600cc). In 2007, they were about $14,000 and $18,000, respectively.
Premiums have spiked because the supply of car COEs - needed for the purchase of new vehicles - has shrunk from more than 100,000 in 2007 to around 27,000 last year.
Property agent Ben Ong, 61, who owns a six-year-old Nissan Latio, is among drivers who find new cars getting beyond their reach.
"I'm forced to keep it," he said. "If COE had been lower, I would have scrapped it and bought a new car."
Another car owner, retired engineer Lee Kok Meng, 56, had been looking to replace his nine-year-old Toyota Camry since last year. But because of high COE prices, he opted recently for a seven-year-old Lexus ES300.
The net result is that 65 per cent of cars here are now between four and eight years old, compared with just 13 per cent in 2007.
But not everybody is complaining. Vehicle-inspection centres are enjoying brisk business.
"As COE prices continue to climb, the number of car deregistrations every month continues to fall," said a spokesman for Vicom, the largest vehicle-inspection company here.
"This will mean an increase in the number of older cars on the road requiring annual inspections. This has been happening and we expect it will continue to happen in the months ahead."
Cars that are three to 10 years old must be certified roadworthy every two years, while older cars must be inspected annually.
The Automobile Association of Singapore is also ramping up its highway recovery services to cope with more breakdowns.
Singapore Motor Workshop Association president Joey Lim said "business is pretty good now because people are keeping their cars longer".
His own workshop, Harmony Motor, has been getting more repair, maintenance and part- replacement jobs.
But he fears circumstances may swing the other way a few years down the road.
"Come 2015, there will be another flood of COEs and premiums might plunge," he said.
Many cars will be reaching the end of their 10-year COE lifespan then. This, he said, will trigger another deluge of cars being scrapped and fewer repair jobs.
Like many in the motor trade, Mr Lim said there should be a more stable supply of COEs to prevent price fluctuations.
Retired engineer Mr Lee concurs. "They need to tweak the allocation of COEs to address the wide swing in premiums."
One way, he suggested, is to divide the car population by 10 to arrive at an average annual supply. Otherwise, there will always be peaks and troughs in the system.
Property agent Mr Ong noted: "High COE prices do not control car population growth - having a quota system already does that."
Meanwhile, Singapore is not the only place where cars are ageing. In the United States, the average age rose from 10.4 years in 2007 to 11.1 years in 2011 - largely because of the severe financial crisis in 2008.
In Japan, the average age has climbed to 6.8 years from 5.1 years over the past decade on the back of its prolonged recession.
christan@sph.com.sg
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
