Cars can only get cheaper
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Consider the current OMV system and the zero down payment financing, I would think that it will make it impossible for cars owners to scrap their cars in the first 3 to 5 years. as such the market for new and used car is like to be affected..
e.g. car owner will not scrap their cars, therefore sales of new car will be low and supply of 3 to 5 years used car will be limited.
In order to keep the economy alive, i think the goverment will make new cars even more affordable by reducing taxes....
Does anyone have a different opinion? -
I dont think gahmen can or will reduce taxes on car considering the need to control the number of cars on the road. If they suddenly reduces taxes....lots of people will be owning cars and volume of traffic will disastrous..
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what i heard from my agent... i dunno whether its true a not.
Government is planning to reduce the ARF again in the near future. And in the far future, prices of cars will be greatly reduced. This is let everyone happy at first. BUT! when u drive ur car out, it will be so freakin expensive. Its like going to be ERP on every district. For example sengkang 1 ERP, hougang got 1, marine parade got 1. So owning a car will be cheap but driving out will be like so ex. So the traffic is still rather the same...will not be heavy. This solves the peoples complaining of expensive car sold in singapore. And it solves its problem with WTO. WTO requested Singapore to reduce its taxes on cars further since singapore joined WTO. Thats why suddenly ARF dropped 20% for now. CIaoz
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If prices of new cars drop to very low, more people will scrap their cars to enjoy the lower depreciation rate.
I don't think many will keep their cars for 5 years. After 3 years, the itch comes and all logical senses are thrown out of the window. -
Very different indeed. First a word about the CURRENT situation. The used cars market is already badly affected because in the past 3 years. Many owners have chosen to scrap their 3-5 years old cars instead of reselling. Why ? Because the price of new cars have been steadily coming down EVEN BEFORE THE GOVERNMENT ANNOUNCED all the reduction in taxes. Before speculating further, look at some facts:Originally posted by Gazelle:Consider the current OMV system and the zero down payment financing, I would think that it will make it impossible for cars owners to scrap their cars in the first 3 to 5 years. as such the market for new and used car is like to be affected..
e.g. car owner will not scrap their cars, therefore sales of new car will be low and supply of 3 to 5 years used car will be limited.
In order to keep the economy alive, i think the goverment will make new cars even more affordable by reducing taxes....
Does anyone have a different opinion?
1. Economy confidence has been low
2. Stiff competition among the car manufacturers
3. More importantly, the pioneer batches of COE have expired. They started in the early 90's. About time. So many more cars are scrapped. This imply that new COE quota has been rising steadily. So this is one reason COE price is finding its way generally. Let's face it since 2001 we are officially in the COE renewal cycle.....
To keep matters in perspective, although the gov says to keep car growth at low single digit but COE quota is growing much faster as many of such old cars are scrapped.
4. Reports in newspaper about few months ago confirm that used car is facing a fast shrinking buyer market as new cars are priced lower due to the above.
Let us ponder a while on what happen. Our gov in wanting very hard to keep its target of car growth have in these 3 years kept the COE quota released fast and even reduce ARF to make sure people fill up the quota. I am not joking just look at the bid ratio on LTA it is only slightly above 1.00. The side effect is no one thinks it make much sense to buy 2nd hand. Car manufactures are happy. gov is happy. New car buyers happy for now. More COE and road taxes revenue. Insurers are happy. Hey ......
See a ST report saying http://www.straitstimes.com/columnist/0,1886,2150-230544-,00.html
So u see the COE quota is driving the car industry not the economy.
During the next 3-5 years. Car scrapped from the old COE will still increase as that was the car growth trend in the 90's. What about car owner of a 3-5 year old car? Will they sell or scrap? Answer is scrap as used car price would not have picked up. In fact many who want to change their car will try to sell before the 4th year mark as many dealers have switched to the brisk car export trade and willing to pay slightly more. One get better rebates for a younger car too. This all imply a negative bias on the new COE prices. Which means new cars would get EVEN CHEAPER.
Many will argue that existing car owners will keep their cars for full 10 years. I disagree. From my observation, once past the 3 years warranty period, the itch to change car is there since maintenance cost will shoot up which requires one to pay in cash not loan. Add the lower interest rate environment for new cars, many would prefer getting a new car and cover warranty thru loans.
Deduce your own. -
Please also don't stay up so late like 2am just over cars
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With the current financing scheme of zero downpayment, cars owners will have to PAY money to sell their cars in the first 5 years. (+rule7Originally posted by Ride wind:Many will argue that existing car owners will keep their cars for full 10 years. I disagree. From my observation, once past the 3 years warranty period, the itch to change car is there since maintenance cost will shoot up which requires one to pay in cash not loan. Add the lower interest rate environment for new cars, many would prefer getting a new car and cover warranty thru loans.
Deduce your own.. I believe many car owners under this scheme will be stucked in a situation where they cant afford to sell. If I am correct the breakeven point is after 5 years, when selling price of car = outstanding loan
The new tax structure has drastically reduce the scrap value of cars, therefore I dont think car owner can afford to scrap their cars after 3 years. -
yeah, dont have to wake up so early to join this forum and talk about carsOriginally posted by Ride wind:Please also don't stay up so late like 2am just over cars -
The car market is influenced very much by the COE quota, both new and used cars. Your issue of breakeven point is pegged to selling price which very much depends on the used car market again. The bottom price would be the ARF rebate + COE rebate. So at that point, the owner just would have to choose the lesser evil. Also how many people is using the zero down (actually is at least 10% down)?Originally posted by Gazelle:With the current financing scheme of zero downpayment, cars owners will have to PAY money to sell their cars in the first 5 years. (+rule7. I believe many car owners under this scheme will be stucked in a situation where they cant afford to sell. If I am correct the breakeven point is after 5 years, when selling price of car = outstanding loan
I am not saying all owners will scrap after 3 years. I just outline the factors for the next 3-5 years imply a negative bias for car prices due to the kick in of COE cycle. Pls understand that in looking at the whole market, there are always car owners of cars of varying years.
The new tax structure has drastically reduce the scrap value of cars, therefore I dont think car owner can afford to scrap their cars after 3 years. -
they'll still be more expensive than anywhere else on earth
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Yeah. Imagine when I know a brand new Volvo cost only US$20+ k !! Here it is at least SG$125k, not to mention the bank loan.Originally posted by AzRaeL:they'll still be more expensive than anywhere else on earth
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Totally agree with the 3-yr itch thing. When you have a penchant for splurging on the fastest depreciating asset (liability?) in the world, economics is the last thing on your mind.
Aren't some new car dealers now dishing out cash-back schemes? If there is no fool-proof cap on the amount of vehicle loan, I guess a future 3-yr-old-car owner can always offset the negative equity by borrowing over 100% on his next new car. Households just get into ever deeper debts. Afterall, who wants to oversave and end up like Japan in the last 10 years?
Just a frivolous thought:
If the govt is only concerned about managing congestion with the vehicle quota system, why don't they
1) ban the import of the cheaper Asian makes
2) Reduce the vehicle tax rates such that the cheapest car still cost $50+k (but it's a volvo or saab)
That way the kancil driver becomes a S40 driver instantly. With no cheaper alternatives allowed, the no. of cars remain the same. Now that's what I call an increase in the quality of life.
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i think gov is taking away the parf thing too..
the next thing we knoe is COE and car price onli.. no more parf..
car will be cheap.. but COE will rise which doesnt affect the taxes -
Im a "night owl"....Originally posted by Ride wind:Please also don't stay up so late like 2am just over cars -
As we know that the government's direction is to gradually reduce car import tax, which mean new car price will be cheaper. If this is the case, dont you agree that used car price will be pressure to sell below new car price. Therefore, this will further affect the so call breakeven point.Originally posted by Ride wind:The car market is influenced very much by the COE quota, both new and used cars. Your issue of breakeven point is pegged to selling price which very much depends on the used car market again. The bottom price would be the ARF rebate + COE rebate. So at that point, the owner just would have to choose the lesser evil. Also how many people is using the zero down (actually is at least 10% down)?
I sincerely doubt that Singapore government will reduce the COE quota, since COE is one of government biggest revenue generator. If controlling car population is on priority, why did singapore government need to increase the COE quota when Singapore is going through its worst recession? -
Have you forgotten the famous quote by Mah Pow Tan that "there is no such thing as a free lunch"? Car tax, COE, ERP are government biggest money generator, and if they reduce something, they will definitely find more things to multiple. Also dont forget about taxes for gasolinOriginally posted by Koon King:Totally agree with the 3-yr itch thing. When you have a penchant for splurging on the fastest depreciating asset (liability?) in the world, economics is the last thing on your mind.
Aren't some new car dealers now dishing out cash-back schemes? If there is no fool-proof cap on the amount of vehicle loan, I guess a future 3-yr-old-car owner can always offset the negative equity by borrowing over 100% on his next new car. Households just get into ever deeper debts. Afterall, who wants to oversave and end up like Japan in the last 10 years?
Just a frivolous thought:
If the govt is only concerned about managing congestion with the vehicle quota system, why don't they
1) ban the import of the cheaper Asian makes
2) Reduce the vehicle tax rates such that the cheapest car still cost $50+k (but it's a volvo or saab)
That way the kancil driver becomes a S40 driver instantly. With no cheaper alternatives allowed, the no. of cars remain the same. Now that's what I call an increase in the quality of life.