Used car dealers urge authorities to review car loans curbs

The Singapore Vehicle Traders Association which represents the interests of over 400 used car dealers here is renewing its call for a review on car loan curbs.

It said many dealers have seen sales drop by between 30 and 80 per cent since the 60-day reprieve period ended in early June.

Used car dealers sold most of their stock of about 7,000 cars during the 60-day reprieve period from April 6 to June 4.

Before the loan curbs kicked in, buyers used to be able to take up to 100 per cent loans for car purchases.

Now that they are unable to do so and dealers are feeling the pinch once again.

Raymond Tang, honorary secretary of Singapore Vehicle Traders Association, said: "In July, the situation is very bad. We have made a survey and majority of the dealers are not selling (well)."

Under current rules, buyers of both new and used cars can only get a loan of up to 60 per cent.

The loan period is capped at five years, down from 10 years.

Dealers said sales have also been affected by a smaller supply of used cars in the market as more people hold on to their cars.

Vincent Wong, director of First Automobile Premium, said: "We have actually experienced as much as a 30 to 40 per cent of depletion of sales and generally to us, it is quite an extensive impact. For the dealers to recover their stocks and replenish their stocks, it is quite difficult at this point of time.

Mr Wong added: "For many of these people, they are not able to change and so they are holding on to their cars. The dealers are also very careful in the valuation of cars. They cannot be buying too high and if they do, it will put themselves in a big financial difficulty."

The loan curbs were introduced to encourage financial prudence.

The Singapore Vehicle Traders Association said Certificate of Entitlement (COE) prices are still high in recent bidding rounds.

Prices for both small and big cars were over S$70,000 in the latest bidding round.

The association has proposed that used car buyers be able to borrow up to 80 per cent of loan which can be serviced over eight years. It said the move will help ease COE premiums.

Mr Tang said: "In this way, I feel that it might help to stabilise the COE premiums because they might pull a small group of people from buying a new car to the used car. If there is a small group of people coming over, that might also slow down the demand on the new car.

"Eighty per cent is quite a fair bit because in terms of used car, it is more towards the mass market and middle and lower income people. I think that telling them to fork out at one go of 40 to 50 per cent of down-payment is might be a very heavy amount for them."

The COE quota for the next six month period starting from August this year to January next year will be about eight per cent higher.

However, dealers said it will unlikely to have much of an impact and bring down COE prices significantly."

The association intends to submit its proposal to the Monetary Authority of Singapore this month.

SOURCE

I'm surprised these dealers are still alive to make some noises. After the 60-day rule suspension, I had expected them to fold up or switch to other automobile related business but they actually held on. And now they want MAS to look like a joke by further amending the rule. Will MAS give in? It will be interesting to find out the result of the appeal.