Complaints against motor vehicle dealers have accelerated this year, and Singapore's consumer watchdog wants the industry to take action.
The Consumers Association of Singapore (Case) received 2,438 complaints against the motor vehicle industry from January to September. This already exceeds the 2,255 made in the whole of last year - when it topped Case's list of most-complained about industries for the first time.
Most of the complaints were aimed at used car dealers. Common gripes included defective parts, late delivery, refusing to repair defects and keeping customers' deposits when loans were not approved.
To mitigate the problem, Case wants all members of the Singapore Vehicle Traders Association (SVTA) to provide after-sales service, including repairs. It also wants them to pay for third-party inspections of all cars and repair any defects before selling them.
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Finding a good second hand car dealer is like looking for a dinosaur in today's age; extinct. If you're not one inclined with automotive knowledge, you will often be coerced into buying a defective car, a trait that many of such dealers possess. So it is not a surprise that the number increased, but it is a surprise that it increased even when the Lemon Law has been passed down.
It seems that if the authorities do not do more to regulate the industry, such bad rep will continue.
Certificate of Entitlement premiums increased across the board in the second bidding exercise for September.
This was the first bidding exercise since the government recently tweaked the COE system, introducing a new criterion for Category A cars. From February next year, cars in that category must not have an engine power of more than 130bhp.
At the end of the tender on Wednesday, the COE price for small cars closed at S$83,751 - an increase of S$6,447.
The premium for big cars ended at S$86,239 - up by S$9,139, the biggest rise in the tender.
Open Category COEs, which can be used for any vehicle type but end up mainly for cars, rose S$7,001 to close at S$87,001.
For commercial vehicles, the COE prices inched up by S$2,002 to close at S$76,001.
COEs for motorcycles ended at S$1,703, an increase of S$43.
Industry watchers had expected COE prices to go up after the government tweaked the system last week.
However, what surprised them was the extent of the increase.
COE premiums for bigger cars surged by nearly 12 per cent.
Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association, said: "After February, Cat B will have a big group of cars going in there... from Cat A. So, most of the people are worried that will cause the COE of Cat B to be overcrowded."
COE prices for smaller cars went up by more than 8 per cent.
Car dealers noted that these prices are inching closer to record highs seen earlier this year.
Ron Lim, general manager of Tan Chong Motor, said: "A lot of people are buying into the story that the COE will go up with this tweak. In a way, it is a self-fulfilling prophecy.
“People are rushing in, but with today's rise, hopefully consumers will take a step back and try to digest the situation and ask themselves whether it is a rational thing to do, to rush in like that.
“We are all trending near record high numbers, does it actually make sense or not is a good question."
Industry experts said that whether or not COE prices will continue to soar depends on the amount of car stock left from car dealers affected by the changes. It also depends on how much consumers can digest such price increases.
Car traders still expect car showrooms to continue to be packed in the months ahead.
However, they cautioned that if COE prices are being driven up so high now, a more drastic correction will be needed later.
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Like clockwork, COE rocketed after the latest bidding since revealing the new ruling. The rush for the cars definitely inflicted this balloon, and the higher it will go if the rush doesn't subside. It will come to a point where consumers are finally finding it hard to swallow the inflation and start to back out, but that is unlikely.
With the CNY coming in less than 4-months' time, the hot period for car purchase is just round the corner. This will further add fuel to the fire and dealers are already expecting COE to hit above S$100k before February.
In a rare move, one of the world’s leading suppliers of automotive components, Robert Bosch (South East Asia), has voiced its concerns about the Land Transport Authority’s (LTA) move to layer on engine power capacity in the classification of small cars for the Certificate of Entitlement system.
Asking the LTA to “reconsider” the new criterion for Category A cars, the company outlined two “unfavourable outcomes” from the tweak, which was announced on Monday and will be implemented in February.
First, manufacturers and dealers will bring into the market cars with “outdated technologies”, which are less fuel-efficient and will emit more carbon dioxide.
“This is a regressive step towards meeting the Singapore Government’s target of lowering overall carbon emissions by 11 per cent (potentially 16 per cent) by 2020,” Bosch said in a statement.
Second, it argued, manufacturers may try to meet the new 97 kilowatts criterion for cars with engine capacities of 1,600cc by curbing engine power output to pass pre-registration inspection tests. This could be done by encoding a limiter within the engine control unit of the vehicle.
Said Bosch: “This limitation can be easily removed after the vehicle leaves the showroom and is not easily detected during mandatory vehicular checks.”
It added: “Introduction of engine power into the COE system favours old technologies and is detrimental to the quality of life for Singaporeans, as it does not achieve a reduction in emission levels.”
Speaking to TODAY, Mr Klaus Landhaeusser, Bosch’s Regional Head, External Affairs and Governmental Relations (South-east Asia), added that the new regulations may lead to more car owners choosing to illegally modify their cars by leveraging on technology to circumvent the limiter placed in the vehicles.
While there are already laws in place against such illegal modifications, Mr Landhaeusser said tracking the horsepower of a car requires a chassis dynamometer, which regular vehicle inspection companies do not have as engine power inspections are not required in regular vehicle checks.
He said: “This is a very expensive machine and … it is only available in workshops which do the tuning themselves.” Bringing in the chassis dynamo systems will add costs to inspection companies, he added.
When asked why Bosch is concerned about the criterion, Mr Landhaeusser said: “We are developing systems for all car manufacturers, whether it is new or old technologies. We also have a very strong lead when it comes to saving the environment.”
In response, the LTA reiterated that it will be implementing “pre-registration safeguards through its vehicle type approval process”. The authority said it will not approve car models which have maximum power output specification that is lower than the same models approved previously, or what has been declared in other markets.
“This will serve as a deterrent against anyone who tries to tune down the maximum power output of his car to qualify for Cat A,” it added.
TODAY understands that the LTA has also brought in chassis dynamometers for the inspection of vehicle engine power.
On car manufacturers bringing in models which are less environmentally-friendly, the LTA said carbon emissions are already accounted for under the Carbon Emissions-based Vehicle Scheme.
“Carbon emissions and fuel efficiency are not good proxies for the value of a car, and could end up penalising mass-market models,” said an LTA spokesperson. The authority also emphasised that it will “review the criteria every few years and consider if adjustments are necessary”.
Dealers TODAY spoke to felt that most owners will not choose to illegally modify their cars.
Singapore Vehicle Traders Association Honorary Secretary Raymond Tang said: “Most car buyers usually go for luxury or continental cars just for the brand name and the status that comes with it. They are usually not so concerned about engine power.”
Motor Traders Association President Glenn Tan also pointed to liability problems of illegally modifying cars. “If they do that, they void the entire warranty of the vehicle because they are forcing it to work outside the operating perimeters of the vehicle,” he said.
“Also, there is an insurance and product liability problem. If you tune it outside of what is promulgated, the insurance can choose not to cover your vehicle. If you kill somebody, there is criminal liability.
“Whoever tunes it illegally, be it the dealers or the consumers, they will have some hand in criminal liability and they have to bear this in mind as well,” Mr Tan added.
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So, the loopholes are covered by LTA. Cars with a different power rating as opposed to the official specs release will not be granted access to Singapore's market. Therefore, the prospect of down tuning car engines will not happen nor help the case.
It seems like the loan curbs for used cars are here to stay -- at least for awhile.
Despite representations from used car dealers, the Monetary Authority of Singapore (MAS) said on Wednesday that the financing restrictions remain relevant as it encourages financial prudence among consumers and exerts a moderating influence on COE prices.
Under current rules that took effect in late February, used-car buyers can borrow only up to 60 per cent of the car's purchase price, with the maximum period of the loan capped at five years.
The Singapore Vehicle Traders Association met MAS on Tuesday to call for a review of the curbs.
The association said many dealers are suffering, with business dropping by at least 50 per cent.
It is proposing that buyers be allowed to borrow up to 80 per cent of the purchase price, and for the loan to be serviced for up to eight years.
MAS said in a statement on Wednesday that it appreciates the feedback, emphasising that the financing restrictions are not permanent.
It also added that it will continue to monitor the situation and review the calibration of the restrictions in line with market conditions.
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Second hand car dealers will have to rough it out under the loan curb conditions, but the severity of the situation seems to be exaggerated as we all know how these dealers work. It will be good that the rogues close down for good.
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.
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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.
