By Christopher Tan, Senior Correspondent
For Toyota agent Borneo Motors, the largest distributor here, another round of retrenchment could be around the corner.
More than 100 employees have already been let go in two earlier rounds of staff cuts. -- ST PHOTO: CAROLINE CHIA
IN WHAT could be a sign of things to come, motor group Cycle & Carriage will let its 20-strong Mitsubishi sales force and administrative support team go after Chinese New Year.
The group, which retrenched a number of other employees earlier this year, will be farming out its Mitsubishi franchise to a sub-dealer.
The move comes on the heels of a shrinking vehicle market, brought on by sliding certificate of entitlement (COE) supplies beginning last year and expected to continue next year.
In fact, estimates put next year's quota at below 40,000 certificates - less than one-third the average annual supply between 2003 and 2008.
The impending contraction sparked frenzied bidding at the latest tender on Wednesday, raising premiums by 30 per cent to a high of $64,900.
Mr Cheah Kim Teck, motor operations chief executive of Cycle & Carriage, said the cost-cutting measure was necessary as the market share of Japanese makes had plunged in the last one year.
The relatively weak euro and higher profit margins have allowed German carmakers like Volkswagen, Audi, BMW and Mercedes-Benz to erode the Japanese's long-dominant presence in the market.
The Japanese brands, which traditionally have thinner margins, have also been saddled with a strong yen in the past year.
Mr Cheah said its Kia operations had also not been profitable of late, but downsizing is not yet in the offing.
'The way to do it is the low-cost way,' Mr Cheah said, adding that Mitsubishi Motors, the car manufacturer, had agreed to the move.
After Chinese New Year, Mitsubishi will move from its current Alexandra Road showroom - which Mr Cheah described as 'expensive' - to Fulco, a sub-dealer located in Kampong Ubi.
Mr Cheah said Cycle & Carriage will retain its role as importer and marketer of the Japanese brand.
He said the freed up space in Alexandra Road will be used to house Cycle & Carriage's expanding used-car operation.
Over at Toyota agent Borneo Motors, the biggest distributor here, another round of retrenchment could be coming soon.
The company has had two earlier rounds, when more than 100 employees were let go.
A senior executive would say only that the company is 'exploring options' now.
Elsewhere, sales staff at motor firms have been leaving in droves since the COE supply was slashed by over a third this year.
A spokesman for Hyundai agent Komoco said its sales strength had fallen by more than 10 per cent this year to about 50 people.
At Chevrolet agent Alpine Motors, the sales staff strength has gone from 40 to 25 in the last one year.
Alpine managing director Albert Pang said: 'It is going to be tough going forward.'
Many motor companies, meanwhile, will have an equally tough time delivering cars sold before Wednesday's spike in COE premiums, which sent prices $8,000 to $15,000 higher.
The firms are unlikely to absorb the huge increases, and are expected to ask buyers to top up on their purchase price.
According to the Land Transport Authority, half of the 3,432 bids that were submitted at Wednesday's tender were unsuccessful.
Seeing how motor firms usually stagger their bids, industry watchers reckon there could be as many as 3,000 buyers who have ordered cars but are unlikely to get them unless they are willing to pay more.
Retired motor trader Lee Chiu San, 64, said: 'It is simply consumers who refuse to be logical. They keep demanding new cars at the wrong times.'
He added: 'There is no reason not to drive a car for 10 years, and no reason whatsoever not to buy a good, second-hand car, which I just did, for less than the price of today's COE.'
The motor industry in Singapore is going into the dumps, thanks to the government and their superb idea of the COE.
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