COE and Car Prices

[pianist]

if the old man thinks like this, how nice the world will be...

many moons ago, when the first yellow emperor was about to die, he dragged aplenty animals, chambermaids, armoured soldiers to buried alive with him. is it true that for some others, when they die, they can bring many things along.

[kang]

if the old man thinks like this, how nice the world will be...

many moons ago, when the first yellow emperor was about to die, he dragged aplenty animals, chambermaids, armoured soldiers to buried alive with him. is it true that for some others, when they die, they can bring many things along.

Some things that we have taken for granted are a luxury to other.

I realize that sometimes we have forgotten how to be grateful for what we have now. Maybe because we have taken so many things for granted and it seems that it is only right that we are given.

Imo, those high up there must ponder and we too have to take a step back so that we can appreciate what we have now.

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Mar 05, 2013
Expect COE prices to dip - but not by much
Expert panel says premiums won't drop drastically unless supply increases

By Royston Sim

WILL certificates of entitlement (COEs) become cheaper?

That was the burning question that readers wanted a panel of three motoring experts to address at The Straits Times' inaugural car forum yesterday, in the light of recent government curbs on loans and hikes in tax for pricier cars.

Other concerns raised include the effects on the used-car market, and whether some motorists would turn to cheaper commercial vehicles.

And the answer to the top question? Yes, COE prices will go down, but not by very much.

"My gut feel is that (the new rules) will ease COE premiums but I don't see them crashing or tumbling down," said Motor Traders Association president Cheah Kim Teck, who was part of the online panel along with Straits Times senior transport correspondent Christopher Tan and former president of the Society of Financial Service Professionals Leong Sze Hian.

Mr Cheah noted that premiums would not move down drastically unless the supply of COEs, which is tied to the vehicle population growth rate, increases.

The number of COEs currently available is at the lowest since the vehicle quota system started in 1990.

From 2009 to 2011, the vehicle population growth rate was set at 1.5 per cent by the Government. But that was cut to 1 per cent last August and to 0.5 per cent last month.

Added Mr Leong: "Fewer people will be able to afford cars, and there will be less demand for COEs.

"But credit companies may come up with more creative (loan) packages. It's hard to say how much COEs will go down by."

As of the most recent bidding exercise, COEs for cars up to 1,600cc was $78,301 while the premium for cars above 1,600cc was $92,667.

Yesterday's hour-long live blogging event was held to help make sense of the measures announced last week by the Government - which included limits on car loans and making it more costly to purchase luxury cars.

Loans are capped at a maximum of 60 per cent of a car's price, and need to be serviced within five years. Previously, buyers could take loans for up to 100 per cent of the purchase price and stretch the tenure to 10 years.

The Additional Registration Fee (ARF) for higher-end cars has also increased. For instance, a BMW 735 will see a 42 per cent rise in its ARF from $74,000 to $105,200 under the new tiered structure.

Over the last three days, readers sent in nearly 50 questions to The Straits Times' Facebook page and e-mail and Twitter accounts.

The panellists agreed that used-car prices will fall.

Mr Tan also noted that car trade-in values will be depressed as traders will be cautious and offer an artificially low price due to the uncertain market.

Another reader asked why car dealers could not separate the price of a car from the COE premium, and noted that some do not refund the difference between the price stated in a contract and actual COE cost.

Mr Tan said that from a business planning perspective, packaging COEs with cars allows dealers to plan for their stock.

He added that consumers have to shop around and beware of dealers that peg rebate levels at an artificially low level to cream off the profits.

Asked what is a reasonable quality of public transport for car users to switch to public transport, the panellists said predictability and accessibility of services have to improve.

For instance, buses have to arrive more frequently.

Mr Leong voiced another concern.

"If you make it harder for people to keep driving, they will be pushed to take public transport," he said. "They should do studies on how this will impact public transport."

roysim@sph.com.sg

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Mar 08, 2013
Car loan curbs not permanent but necessary for now: Tharman

By Goh Chin Lian

THE new curbs on car loans are necessary for now to keep a lid on inflationary pressures and rein in borrowing, Mr Tharman Shanmugaratnam said yesterday.

But they are not permanent, and depending on market developments, will be reviewed later, he added.

The Deputy Prime Minister gave this assurance as he explained the surprise move to cap car loans at up to 60 per cent of purchase price.

Car prices, he said, made up one-fifth to half of Singapore's total inflation in the past three years, and they alone accounted for an increase of one percentage point in inflation last year, when prices overall rose 4.6 per cent over the year before.

Dampening demand for motor vehicles will relieve inflationary pressures "to the benefit of most Singaporeans", he said.

In his Budget round-up speech, Mr Tharman, who is also Finance Minister, acceded to MPs' calls to ease the loan restrictions for two groups.

The Monetary Authority of Singapore (MAS) will exempt the physically disabled or their caregivers from the loan curbs for one car. It will give details later.

Used-car dealers will get a year, up from nine months now, to find buyers for their cars. MAS is also studying ways to factor in depreciation when deciding if it should apply a 50 or 60 per cent cap on loans for used cars.

But he stopped short of giving concessions to families with young children or elderly parents.

It was not possible "to liberalise further at this point, without undermining one of the important reasons for the new loan rules, which is to cool demand and COE prices", he said.

The changes come 10 days after MAS restricted car loans to 50 or 60 per cent of purchase price, to be repaid within five years. Previously, loans were up to 100 per cent of purchase price and could be serviced over 10 years.

Yesterday, Mr Tharman set out the Government's reasons for the change in policy after a decade of deregulation.

Strong demand and a slower increase in supply had driven certificate of entitlement (COE) prices up by 40 to 60 per cent in the last two years. Low interest rates and easy credit fuelled this spike. The Government received feedback from Singaporeans on curbing loans to cool the market.

Two risks were apparent. One, car buyers will take on more debt to finance car purchases, "sometimes beyond what is financially prudent". Two, as COE prices shape inflationary expectations, a sharp spike feeds into a high inflation rate that affects all Singaporeans and the economy.

For its policy, MAS looked back to 1995, when car loans were capped at 70 per cent of purchase price, to be repaid within seven years.

"It did not have discernible effect on COEs at that time and eventually we lifted the restrictions in 2003," Mr Tharman said.

"This time round, COE prices have risen much more significantly. MAS has unfortunately... bearing in mind the past experience, had to take much tougher measures to make sure that the financial restrictions are effective."

chinlian@sph.com.sg

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Mar 11, 2013
Used-car dealers appeal again to ease curbs
They call for exemption on vehicles bought by them before loan ruling

By Jermyn Chow

USED-CAR dealers, whose profits have plunged since the Government's tough car loan curbs kicked in on Feb 26, are again urging the Monetary Authority of Singapore (MAS) to do more to ease restrictions.

In its latest appeal, the Singapore Vehicle Traders Association (SVTA) is proposing that new loan curbs not be applied to vehicles bought by used-car dealers before Feb 26, when the new loan restrictions kicked in.

Exempting these used cars would make it easier for car dealers to sell off the bulk of their fleets without incurring huge losses, said SVTA president Neo Tiam Ting, who represents more than 400 used-car dealers here.

The SVTA submitted the appeal to the MAS last Saturday and is waiting for MAS to respond.

The appeal comes after Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said last Thursday that the MAS would give car dealers a year - up from nine months now - to find buyers for their cars.

This was in response to MPs' pleas to help car dealers better adapt to the drastic curbs on car ownership.

The cooling measures cap car loans at up to 60 per cent of a vehicle's purchase price and halve the maximum duration of the loan to five years.

Mr Tharman said the MAS was also studying ways to factor in depreciation when deciding if it should apply a 50 or 60 per cent cap on loans for used cars.

But Mr Neo said the new measures "will not make a difference" as many dealers may not survive the next nine months.

"What they need now is to get rid of the car stock, but the market is already dead and no one is buying cars," he said.

Car dealers The Straits Times spoke to are reeling from the restrictions, with some saying profits have nose-dived by 100 per cent.

Mr Bret Chia, director of RPM Automobile, said he has not closed a deal since the restrictions were implemented.

"No one is coming to our showrooms, even after we cut the prices by 20 per cent... It's worse than I had expected."

He added that the three-month extension for him to sell his cars is not helpful.

Also badly hit is used-car trader Desmond Lee, who is saddled with more than 100 luxury cars.

"We will just have to keep dropping our prices until people start buying again," he said.

"Even if we become bargain bins, at least we can get rid of the cars."

jermync@sph.com.sg

[a74henry]

Soon, there will be lelong...lelong for used cars.

[Sampling]

If that article is true it shows that many people are buying cars on borrowed wealth!

[Stocker]

Would these used dealers appeal if the change of policy is to their advantage ?

[viruskbs]

The Straits Times
www.straitstimes.com
Published on Mar 11, 2013
Used-car dealers appeal again to ease curbs
They call for exemption on vehicles bought by them before loan ruling

By Jermyn Chow

USED-CAR dealers, whose profits have plunged since the Government's tough car loan curbs kicked in on Feb 26, are again urging the Monetary Authority of Singapore (MAS) to do more to ease restrictions.

In its latest appeal, the Singapore Vehicle Traders Association (SVTA) is proposing that new loan curbs not be applied to vehicles bought by used-car dealers before Feb 26, when the new loan restrictions kicked in.

Exempting these used cars would make it easier for car dealers to sell off the bulk of their fleets without incurring huge losses, said SVTA president Neo Tiam Ting, who represents more than 400 used-car dealers here.

The SVTA submitted the appeal to the MAS last Saturday and is waiting for MAS to respond.

The appeal comes after Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said last Thursday that the MAS would give car dealers a year - up from nine months now - to find buyers for their cars.

This was in response to MPs' pleas to help car dealers better adapt to the drastic curbs on car ownership.

The cooling measures cap car loans at up to 60 per cent of a vehicle's purchase price and halve the maximum duration of the loan to five years.

Mr Tharman said the MAS was also studying ways to factor in depreciation when deciding if it should apply a 50 or 60 per cent cap on loans for used cars.

But Mr Neo said the new measures "will not make a difference" as many dealers may not survive the next nine months.

"What they need now is to get rid of the car stock, but the market is already dead and no one is buying cars," he said.

Car dealers The Straits Times spoke to are reeling from the restrictions, with some saying profits have nose-dived by 100 per cent.

Mr Bret Chia, director of RPM Automobile, said he has not closed a deal since the restrictions were implemented.

"No one is coming to our showrooms, even after we cut the prices by 20 per cent... It's worse than I had expected."

He added that the three-month extension for him to sell his cars is not helpful.

Also badly hit is used-car trader Desmond Lee, who is saddled with more than 100 luxury cars.

"We will just have to keep dropping our prices until people start buying again," he said.

"Even if we become bargain bins, at least we can get rid of the cars."

jermync@sph.com.sg

100% drop in profits, that is interesting.

I think people are just waiting on the sidelines to buy the car. things will be more clearer after the the next COE results are out this wednesday.

I am waiting to buy my first car.

[godjira1]

As a majority shareholder in a used car dealer I can say a lot of dealers will shut down - personally we are working thru some alternate plans to see if its worth continuing. As a businessman, legislative risk is one of those u take so I will live with it.

For those who only have bad things to say, just think - my staff are human too. Some people in the industry will be laid off. How would you feel if someone said you deserve to lose your job? Might be true but not nice to hear nonetheless. Maybe '将心比心' is a thing of the past?

As for trends - I have no doubt car prices will come off and coe prices will drop. Just matter of when and how far.