Used-car dealers, small firms not jumping on car leasing bandwagon

Most used-car dealers and small motor firms Channel NewsAsia spoke to are not jumping on the car leasing bandwagon, despite bigger players getting in on the act since the authorities imposed borrowing limits on vehicle purchases.

They cite high costs of running a leasing business and unfamiliarity with how to do it as reasons.

Still, a few are eyeing the business model as an alternative to car sales.

Car leasing schemes are a mid-point between short-term rental and ownership, where you typically hold on to a vehicle for over a year and pay a monthly fee to use it.

The car goes back to the leasing company after that.

Not being stuck with a depreciating asset like a vehicle has drawn people to the scheme, plus the fact that a sizeable downpayment isn't needed.

The government's imposition of loan curbs means buyers have to foot a minimum 40 per cent downpayment for vehicle purchases.

Observers have noted that car leasing is one way of beating the curbs. Others call it an option.

Eddie Ho, general manager of Sime Darby Services, said: "It's not a way to beat the government's system but it's just another alternative for motorists to consider, because there's no way we can beat the system.

"Ultimately, leasing...to me is like another dish on the menu for the companies to sell."

Not all motor firms are keen on leasing, since much of the onus falls on the leasing company to keep leased vehicles in order.

Many companies simply don't have the resources to do it.

Still, some plan to capitalise on the opportunity.

CarTimes Automobile plans to starts a leasing arm in June 2013 while Yong Lee Seng Motor has been dabbling with leasing for around three years.

Raymond Tang, Yong Lee Seng's director, said: "The difficulty of doing it is that a lot of follow-up, a lot of support you need to give to these consumers. Or else, the consumers will not be happy...what happens if the car breaks down in the middle of the night? You must have workshop support."

Observers note that the government's "car-cooling" measures have shifted more attention to the leasing business, although it has been around in Singapore for over a decade.

SOURCE

A way to beat the system for aspiring "car owners". You can have a car but save the hassle of 100% owning the car. It's a viable option if one is unable to fork out the huge downpayment needed according to the new ruling by MAS.