Friday, March 29, 2013

Driven to desperation, used-car dealers appeal again


Hit by the triple whammy of loan curbs, cheaper new cars and higher interest rates, used-car dealers here — some of whom failed to close a single deal in recent weeks despite holding a fire-sale — made another appeal yesterday to the authorities, just a week after their initial appeal was rejected.

Following a meeting between the Singapore Vehicle Traders Association (SVTA) — which represents more than 400 used-car dealers — and the Monetary Authority of Singapore (MAS), SVTA President Neo Tiam Ting said the association again proposed that the authorities do not impose the financing restrictions on cars that were bought by the dealers before the curbs kicked in on Feb 26.

Mr Neo said: “We are trying to work towards a solution where second-hand car dealers can sell these vehicles under the old rules, that is, bigger loan amounts and longer tenures.”

While the MAS declined to comment on the meeting, Mr Neo said the authorities’ doors were not closed. The MAS was “willing to meet up again”, he added.

Under the loan curbs, the tenures of car loans are capped at five years, with the maximum loan amount pegged to 50 or 60 per cent of the vehicle’s purchase price, depending on the Open Market Value. Previously, there was no cap on the loan, and buyers could take up to 10 years to repay the money.

In response to the SVTA’s original appeal, the MAS had sent a letter to the association last Wed. An MAS spokesman told this newspaper earlier that in its response last week, it “highlighted that the new and used motor vehicle markets are essentially linked”. He added: “If used motor vehicles were exempt from the financing restrictions, the demand for these vehicles would push their prices up and drive demand back to the new motor vehicle market, resulting in higher COE (Certificate of Entitlement) prices and compromising the policy objective.”

The MAS has also made some concessions, such as allowing depreciation to be taken into account when calculating the Open Market Value of a used motor vehicle to determine the loan-to-value ratio for car loans. It has also stressed that the curbs are not intended to be permanent, and will be adjusted as market conditions change.

On Wednesday, in the latest round of COE bidding — the second since the loan curbs were rolled out — the premium for small cars continued to slide to S$64,209 — the lowest in six months. While the COE for bigger cars rebounded to S$73,900, it was still some way below previous levels.

Apart from new cars being cheaper — which brought people back to the car showrooms — the interest rates for loans for used cars have also gone up, used-car dealers said. They were informed by some of the banks of the increase in recent weeks.

Mr Kelvin Tan of Straits Euro Motors said his firm has suffered a loss of about S$50,000 in the past two weeks, as it slashed prices to draw customers.

Mr Alex Wong, a manager at Hua Yang, said the firm would be shutting down two outlets next month. Pointing out how the falling COE prices have resulted in brisk sales for new cars, Mr Wong questioned the MAS policy which has seemingly hurt used-car dealers more. He said the company’s Turf City branch only sold two cars in the past fortnight.

Mr Teh Han Sing, Managing Director of Chin Lian Seng Motor Trading, said the local banks have increased interest rates for used-car loans to 2.88 per cent, up from 2.28 per cent.

Some financing companies such as Hitachi Capital and Century Tokyo Leasing have raised it further to 3.28 per cent, Mr Wong said.

Mr Wong added: “The banks are increasing their interest rates to make up for the shorter loan tenure. But our customers are very unhappy about this. Some of them have low budgets of maybe S$500 a month. But now they have to pay S$100 to S$200 more, which they cannot afford.”

Meanwhile, used-car dealers at Turf City said that their landlord has rejected their request for lower rents because they had just signed three-year tenancy agreements last year. Mr Teh, who said he has lost more than S$100,000 since the loan curbs kicked in, said: “The MAS should have told us much earlier, so that we don’t bring in and keep so much stock. I really don’t know how to continue.”

SOURCE

MAS is doing the right thing by not succumbing to the dealers' request. Imagine the main bulk of the cars brought in by the dealers before the new ruling came about being not applicable to it, it would render the new law completely useless and nothing will change.

It is probably time for the dealers to "pay back" with the good past two years they had when COE was skyrocketing and they adjust their resale prices accordingly even though most of them have low paper value.

Right now, they are bleeding. It will be interesting to see how many will manage to survive by the end of this year.


Wednesday, March 27, 2013

COEs mostly higher, premiums for small cars down to $64,209


Certificates of Entitlement (COEs) ended higher in all but one category in the latest bidding exercise on Wednesday afternoon.

Premiums for small cars fell $10,480 to $64,209, while those of big cars rose $15,810 to $73,900.

The Open Category saw the second highest increase of $8,300 to $73,301.

COEs for commercial vehicles rose $211 to $54,111, while motorcycles edged up $14 to $1,909.

SOURCE

This is more like it, which Cat B higher than Cat A. The massive drop in Cat B price two weeks ago sparked some frenzy buying in luxurious car showrooms at BMW and Mercedes, with the latter pushing to clear their stock of the E-Class models in preparation of receiving the new variant of the series.

These prices are just about right at the moment. Minor fluctuations will be expected in the next few bidding before prices will stabilize, unless another big change is introduced again.


Sunday, March 17, 2013

SJL9216D refused to give way to an ambulance


As a fellow driver, I feel disgusted with such drivers in Singapore. Have we all became so indifferent and selfish that whatever that doesn't concern us, we don't give a shit about it?

To the driver of the Honda Airwave, I hope you'll reflect on your action. Imagine one day your loved one is in need of emergency medical attention and the ambulance is being hindered on the highway by someone like you, you might just lose your loved one with the added minutes delayed.

Suggestion to lift restricted hours on private car rental scheme


The Singapore Vehicle Rental Association said the government can consider lifting the restricted hours currently placed on the private car rental scheme.

This comes as the Land Transport Authority (LTA) announced at the recent Committee of Supply, that it is studying the liberalisation of this scheme.

The Private Car Rental Scheme was introduced in 1996 to allow non-car owners to have access to private transport on weekends and public holidays.

Under this scheme, private car owners are allowed to rent out their cars from Friday, 7pm, to the following Monday, 7am; and from 7pm on the eve of the public holiday to 7am on the 1st working day following the public holiday.

Interested parties can rent out their cars through advertisements in the newspapers or other forms of media.

Currently, chauffeur-driven rentals are not allowed.

The Association said the scheme could be expanded to include rental on week days as well.

And as private car owners do not have to register with the LTA when using the scheme, the Association also feels there must be some form of control as this could affect taxi operators and car rental companies.

Honorary secretary of the Singapore Vehicle Rental Association Joseph Poh said: "One of the way is to allow them to go to car rental companies to transact all this rental transactions. If not properly controlled, these cars could be used for limousine services and ferrying. If that is the case, it'd interfere with taxi operations."

SOURCE

Well, good news for car owners looking to supplement their car loan with some rental income, just like how people do it to housing, but on a temporary basis. It is a good idea to rent one's car out for added income, until conflict arises with insurance issues. Currently, a rented car will need to have an additional form of insurance during the rental period. Failure to do so means breaking the law, thus do not try doing it or you'll risk fines.

As a private car owner, would you bear to rent out your own car? You never know how the car will get abused when not in your care.



Wednesday, March 13, 2013

COEs for big cars see huge plunge in latest exercise


Certificate of Entitlement (COE) premiums for big cars plummeted, with Category B and open category premiums seeing a 37.3 per cent and 29.3 per cent drop respectively in premiums at the end of the latest bidding exercise today. This is the first bidding exercise since curbs on car loans were imposed by the Monetary Authority of Singapore and the main road tax was also raised.

The COE premium for big cars (1,601cc and above) dropped by 37.3 per cent from S$92,667 in the earlier bidding exercise to S$58,090.

In the Open category, where COEs can be used for any vehicle type, but are usually used for big cars, the premium dropped by 29.3 per cent to S$65,001 from S$91,910 last month

The premium for cars 1,600 cc and below (Category A) finished at S$74,686, down for the previous price of S$78, 301 which was recorded at the last bidding exercise.

Premium for motorcycles increased by 25.3 per cent to S$1,895 while the premiums for commercial vehicles also saw a 0.7 per cent increase to finish at S$53,900.

SOURCE

What can I say!! It's definitely a knee jerk reaction, and from today onwards, hordes of car buyers will rush in on Cat B cars until the next bidding exercise two weeks later. It will bounce back on the next exercise for sure. 

What's the best car to buy now are those above 1600cc with their OMV below S$25,000. Such cars will have massive savings considering the excess amount from the OMV will not translate to much increase on the ARF. If this was a few years back, the Subaru WRX will be the best value for money car to get considering it's 2L and its OMV is just a wee bit below S$20,000 and will be have any added ARF. This will translate to at least $30,000 savings, almost equivalent to the amount of COE dropped for Cat B.

Are you heading to the car showroom soon?


Saturday, March 9, 2013

Motor traders fear plugging of loopholes in car loan curbs


Some motor traders hope the government will not further regulate the car loan industry, after it introduced new curbs last week.

They said such a move will price out more individuals from buying a car.

Car buyers now have to fork out a minimum cash downpayment of 40 per cent.

This comes after the Monetary Authority of Singapore (MAS) imposed a car loan restriction of up to 60 per cent.

Loans will also have to be serviced over a shorter period of five years.

The move aims to encourage financial prudence.

But buyers are still able to get a higher quantum over a longer period, from financing companies who do not fall under MAS' regulations.

One credit company which offers a quantum of up to 80 per cent, for example, has seen more interest from buyers.

Jesse Tan, managing director of Speed Credit, said: "Obviously because of the curbs, there are more enquiries, but the approval rate really depends on the customer, they still need to come with the downpayment, it is no longer just 100 per cent.

"We are more selective now, we also have to check with the customer whether they can finance the loan."

MAS has said that it is looking to plug the loophole.

But some said the industry needs some "breathing space" before more regulations are imposed.

Such a move will also restrict options for individuals or businesses who really need private transport.

Mohamed Taifoor, owner of Mohamed Taifoor Motoring, said: "I think they should be soft on it, and not regulate 100 per cent. They should be soft on this as it is an alternative because the needs of people (with) private transport (are) different.

"(Some may need it) for leisure, (others need it) just to go to office. But these are people who need it to make money out of it, to get income out of it."

Some used car dealers said business has already gone down by 50 per cent.

The Singapore Vehicle Traders Association - which has described the curbs as "drastic" - met MAS on Tuesday to register its concerns and is hoping for a more gradual curb.

It is waiting for a response by this Friday.

Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association, said: "The rich can still afford to buy in paying 40 per cent or 50 per cent downpayment, so to them it is not an issue at all. But to the middle- and low-income people, it is really a big effect."

Despite a slowing market, dealers do not expect premiums for Certificates of Entitlement (COEs) to go down tremendously as the quota supply remains low.

Some dealers MediaCorp spoke with said they will have to adopt a wait-and-see approach before they can fully understand the impact on the market. They expect COE prices to more or less stabilise only after four rounds of bidding.

SOURCE

Seriously, if you start loaning money from unconventional and non-regulated sources just to get a car, you're asking for trouble. It will be good that MAS manages to plug these loophole and stamp out all the crazy buyers who will do all means just to own a set of wheels.