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Car dealers unhappy with Land Transport Authority.

Wednesday, January 15, 2014

I read a commentary in The Business Times yesterday and found it amusing for various reasons.

It was a piece on how car dealers are unhappy with the Land Transport Authority (LTA) for what have been perceived as piecemeal announcements.

Honestly, I think they are more unhappy with the fact that the business environment has become very difficult for them, forcing many smaller dealerships to close in recent times.


For those of us who drive, we know that road traffic conditions have worsened remarkably and this is partially due to a motor vehicle population that has burgeoned in recent years.

More people also "seemed" to be "prosperous" as their demand for cars pushed Certificate of Entitlement (COE) prices through the roof just a few months ago.

The operative word here is "seemed" and not "prosperous". Why?

When "cooling measures" were introduced last year, demand fell dramatically. It shows quite obviously that many people were only able to afford cars here in Singapore when they had access to much bigger loans and 100% LTV (loan to value) was also available.

One complaint a car dealer had was about the categorising of cars not just by engine capacity but also by engine output. This caused brands like BMW to be completely pushed out of Category A which is where mass market cars compete for COEs.

Is this a bad thing?

Well, bad for the rich or those who want to appear rich. For most of us average folks, I think it is a good thing. Actually, for the rich, it might not even have mattered.

Imagine a middle income family buying a 1.5 litre Japanese make mass market car competing for a COE with a millionaire who was buying an entry level BMW for his son's 18th birthday. Something feels wrong here. What is it? I wonder.

So, the categorisation criteria are better now. I am not saying that the system is now perfect, of course, but I feel that it is better. More equitable, won't you agree?

Related posts:
1. First time car buyer? Get a Mercedes Benz.
2. Cooling measures for cars: Buying pre-owned.
3. Cooling measures for cars spurned.
4. Cooling measures for cars.
5. If we are not rich, don't act rich.

9 comments:

Singapore Man of Leisure said...

AK,

Tell you a funny thing. I poked someone recently on a similar topic.

Last few years always complain property prices very high (although he not buying or speculating).

Now due to property cooling measures, complain big daddy is hurting the livelihood of property agents (this person not in the property line).

I tickle tickle him; he didn't talk to me for a few days...

Thank goodness! Peace to my ears.

Most of us are like that. Before buying car or property, we want lower prices. After buying, higher prices are most welcomed!

AK71 said...

Hi SMOL,

Some people just like to complain. It is a hobby. I am sure you have hobbies too. We should try to be more understanding lah. ;p

There are always winners and there are always losers. We cannot always be winning. It is only reasonable.

The car dealers here have had some good times before and if they had been prudent, I am sure they would have stashed away quite a bit of money.

If business is really terrible now, think of the options available to them. No point banging head against a wall.

I like the cooling measures implemented by the government to encourage prudent consumption. In fact, I feel that they were a bit late.

veronika said...

Image is everything and not only to the chinese race... you cant show off your LV wallet ( it could be fake ) and you cant show off your home, its not portable.

That is the pull factor.. to get a car.

The car industry supports a multitude of businesses. From simple car wax & wash to engine retuning and everything in between.

The Gov enjoys huge revenues collecting all manner of fees & taxes, COE,LTA fees, petrol tax, GST, car park ERP, insurance, traffic fines, vehicle inspections.

Those are push factors, to promote car ownership... but they will never say that!

Its a cash cow that has spider-like arms!

Properties & cars are the 2 golden keys that has been the driving force in domestic consumption. Can you imagine all the businesses associated with these 2 keys?


AK71 said...

Hi Veronika,

Indeed, the multiplier effect is just mind boggling for the car industry. :)

You have also brought up something which is so true and that is how people show off by driving a nice car.

I know some towkays who drive very nice cars but are penny pinching when it comes to other aspects of life. -.-"

E H said...

Eurosports IPO trades this Friday. In light of the challenging automotive market, I wonder if this is a sign of 'milking the market' whilst they can?

AK71 said...

Hi E H,

I really dislike Lambos... I had a neighbour who had one. Aiyoh! The noise! And he would come back after midnight all the time and it was enough to wake up the whole estate. -.-"

vansontan said...

There are still ways to solve this cars and COEs issue. Gov can start limiting 1 car per household address.

As you've mentioned, a millionaire can buy car for his 18 year old son, but a middle income family of 4 can't afford the COE because the rich wants 3-4 cars parking inside their garages, something is very wrong here.

Limit 1 car per household to stop this problem. But again, our ministers are rich, so they won't do that to stop themselves.

AK71 said...

Hi Vanson,

Although I always advocate a frugal lifestyle, I will not deprive anyone of his right to greater consumption. If they can pay, let them play. :)

We can make people who buy 2nd or 3rd cars pay a lot more for the privilege (maybe they need to buy 2 COEs instead of 1?) but I will not ban them from buying the extra car(s). ;)

I will then use the extra money contributed by these people (thank you very much) for programs for our ageing population, which is a pressing issue. This will lighten the tax burden on the rest of us regular folks. :)

OK, I hope my blog doesn't get gazetted after this. LOL.

AK71 said...

COE for small cars drops S$9,000 in latest bidding exercise

The Certificate of Entitlement for small cars sees the biggest decrease, falling from S$54,301 to S$45,002.


Source:
http://www.channelnewsasia.com/news/singapore/coe-for-small-cars-drops/2402306.html

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