YahooNews
While everyone was harping on the high Certificate of Entitlement (COE) prices, another spanner was thrown into the works with the latest announcements regarding cars.
Very first, the Monetary Authority of Singapore (MAS) has restricted financing for motor vehicles. Buying a car now requires a down payment of forty to fifty per cent of the car purchase price in cash, including relevant taxes and the COE. In addition, the tenure of the loan has been switched to five years instead of Ten. These revisions apply to both fresh and used cars, but not to motorcycles and commercial vehicles.
During the budget speech, it was also announced that there will now be a tiered tax rate for passenger cars. Instead of all cars paying the same main vehicle tax (or known as extra registration fee or ARF) at a vapid rate of one hundred per cent of the car’s open market value (OMV), more expensive cars now have to pay higher rates. For example, a Mercedes-Benz E250 which has an OMV of above $50,000 will need to pay one hundred eighty per cent of incremental OMV.
These cooling measures make car ownership even tougher for the average Singaporean.
Not leaving behind, there is the Carbon-based Emissions Vehicle Scheme (CEVS) that will begin imposing penalties for cars emitting above a certain level of carbon dioxide from July onwards.
Some banks have also raised their interest rates.
MAS said its motor vehicle loan confinements are meant “to encourage financial prudence of car buyers” so that people don’t end up over-extending themselves, but some feel that there are greater societal and commercial effects resulting from this.
A lot of unhappiness and resentment have been circling on the ground, with many exclaiming that these measures will only serve to widen the gap inbetween the rich and the poor.
An enormously avid car enthusiast, who declined to be named, was left feeling utterly disappointed on Monday night, hours after the budget speech. He said, “I was planning to buy a BMW M3, but right now all hopes are gone. I was intending to migrate but determined to stay put and get a car, however, these measures just killed everything. For a brand fresh M3, I would need to fork out about $200,000 up front for a fifty per cent loan. I think it is time to put that migration plan into place.”
People will be coerced to rethink their priorities and only those who can truly afford a car will be able to do so now.
A larger initial cash output might also lead to people buying a smaller car instead of a fatter car that the same down payment amount could fetch previously. That would mean watching an increase of puny cars in the city and making exotic cars more exotic than before.
“This will truly force people to realign their priorities. It is one thing to prevent us from overstretching ourselves financially, but it also severely boundaries the purchase options,” said Yit Beng, 28, who is in automotive-related sales.
He added, “Young couples, families and sales personnel who need their vehicles for their jobs will be the worst hit. Already the amount of cash on arm is low, with the brief loan period now and the enhanced interest rates, these all make for a recipe for disaster.”
Indeed, the hardest hit will be on people who indeed need the car, such as those with children, elderly or requiring a car for their businesses. Businesses may be compelled to get commercial vehicles and people may have to commence whipping out their EZ-link cards more often.
The car trade will also suffer, as these measures came so abruptly that it has left industry players scrambling for the next few days.
“This has caused a knee-jerk reaction from the car industry, with a lot of uncertainty especially in the very first few days that go after the announcements. I think this is most likely the right thing to do, for the government to implement this deterrent to avoid a social problem down the road if the market is overheating with people getting enormously cheap credit and over-leveraging themselves. People will be compelled to reconsider taking the public transport,” said Lung of luxury concierge service Quintessentially Lifestyle and motorsport garment Veritas Racing.
The car market will have to look into things such as revamping the pricing of cars and determining whether to pass on the entire incremental ARF to consumers.
It is understood that some car distributors are negotiating with their principals for better pricing so that they do not need to pass on the incremental ARF to consumers directly.
Business will also be greatly affected with less people able to buy cars. Those who are looking to sell their cars may be stuck too.
“The fresh rules are certainly a deterrent for most people who are ‘addicted’ to switching cars at a fad. For me, I just switched my car so it will be at least another three to five years before I will entertain the thought again. However, instead of selling my existing car, I may have to export them. The car trade would slow down even more,” said Charmain Hng, 35, senior financial services manager.
A used car dealer I spoke to said that he might end up having to fold the business. He said, “I’m only a small-timer in the field but this is enough to kill my business. Those used car dealers with big inventories will run into fatter problems now.”
COE bidding for the months of March and April have been revised to permit consumers and the motor industry more time to adjust to the switches. With the request for cars down, COE premiums might drop. Hopefully in the long run, the COE prices will be brought down and help to offset car prices.
Cars in Singapore to become a greater luxury
Cars in Singapore to become a greater luxury
While everyone was harping on the high Certificate of Entitlement (COE) prices, another spanner was thrown into the works with the latest announcements regarding cars.
Very first, the Monetary Authority of Singapore (MAS) has restricted financing for motor vehicles. Buying a car now requires a down payment of forty to fifty per cent of the car purchase price in cash, including relevant taxes and the COE. In addition, the tenure of the loan has been switched to five years instead of Ten. These revisions apply to both fresh and used cars, but not to motorcycles and commercial vehicles.
During the budget speech, it was also announced that there will now be a tiered tax rate for passenger cars. Instead of all cars paying the same main vehicle tax (or known as extra registration fee or ARF) at a plane rate of one hundred per cent of the car’s open market value (OMV), more expensive cars now have to pay higher rates. For example, a Mercedes-Benz E250 which has an OMV of above $50,000 will need to pay one hundred eighty per cent of incremental OMV.
These cooling measures make car ownership even tougher for the average Singaporean.
Not leaving behind, there is the Carbon-based Emissions Vehicle Scheme (CEVS) that will begin imposing penalties for cars emitting above a certain level of carbon dioxide from July onwards.
Some banks have also raised their interest rates.
MAS said its motor vehicle loan confinements are meant “to encourage financial prudence of car buyers” so that people don’t end up over-extending themselves, but some feel that there are greater societal and commercial effects resulting from this.
A lot of unhappiness and resentment have been circling on the ground, with many exclaiming that these measures will only serve to widen the gap inbetween the rich and the poor.
An enormously avid car enthusiast, who declined to be named, was left feeling utterly disappointed on Monday night, hours after the budget speech. He said, “I was planning to buy a BMW M3, but right now all hopes are gone. I was intending to migrate but determined to stay put and get a car, however, these measures just killed everything. For a brand fresh M3, I would need to fork out about $200,000 up front for a fifty per cent loan. I think it is time to put that migration plan into place.”
People will be compelled to rethink their priorities and only those who can truly afford a car will be able to do so now.
A larger initial cash output might also lead to people buying a smaller car instead of a fatter car that the same down payment amount could fetch previously. That would mean watching an increase of petite cars in the city and making exotic cars more exotic than before.
“This will indeed force people to realign their priorities. It is one thing to prevent us from overstretching ourselves financially, but it also severely thresholds the purchase options,” said Yit Beng, 28, who is in automotive-related sales.
He added, “Young couples, families and sales personnel who need their vehicles for their jobs will be the worst hit. Already the amount of cash on forearm is low, with the brief loan period now and the enhanced interest rates, these all make for a recipe for disaster.”
Indeed, the hardest hit will be on people who indeed need the car, such as those with children, elderly or requiring a car for their businesses. Businesses may be compelled to get commercial vehicles and people may have to begin whipping out their EZ-link cards more often.
The car trade will also suffer, as these measures came so abruptly that it has left industry players scrambling for the next few days.
“This has caused a knee-jerk reaction from the car industry, with a lot of uncertainty especially in the very first few days that go after the announcements. I think this is very likely the right thing to do, for the government to implement this deterrent to avoid a social problem down the road if the market is overheating with people getting enormously cheap credit and over-leveraging themselves. People will be compelled to reconsider taking the public transport,” said Lung of luxury concierge service Quintessentially Lifestyle and motorsport garment Veritas Racing.
The car market will have to look into things such as revamping the pricing of cars and determining whether to pass on the entire incremental ARF to consumers.
It is understood that some car distributors are negotiating with their principals for better pricing so that they do not need to pass on the incremental ARF to consumers directly.
Business will also be greatly affected with less people able to buy cars. Those who are looking to sell their cars may be stuck too.
“The fresh rules are undoubtedly a deterrent for most people who are ‘addicted’ to switching cars at a fad. For me, I just switched my car so it will be at least another three to five years before I will entertain the thought again. However, instead of selling my existing car, I may have to export them. The car trade would slow down even more,” said Charmain Hng, 35, senior financial services manager.
A used car dealer I spoke to said that he might end up having to fold the business. He said, “I’m only a small-timer in the field but this is enough to kill my business. Those used car dealers with big inventories will run into thicker problems now.”
COE bidding for the months of March and April have been revised to permit consumers and the motor industry more time to adjust to the switches. With the request for cars down, COE premiums might drop. Hopefully in the long run, the COE prices will be brought down and help to offset car prices.