Saturday, December 3, 2011

Singapore to become a premium car market?

High-end names such as Audi, BMW and Mercedes-Benz are expected to make up for more than half of new cars sales next year, according to a Straits Times report today.

This is due to the lower number of certificates of entitlement available next year, which predetermines the number of cars sold.

The paper reported that the motor industry is "expecting next year's supply to shrink to between 26,000 and 28,000, from around 30,000 this year, 42,000 last year and an average of 100,000 a year between 2004 and 2008."

With a smaller supply in future COE numbers, are car prices expected to increase again?

Already, a restricted supply this year have caused COE prices to rise to more than $50,000 for cars up to 1,600cc and more than $70,000 for bigger cars, according to the report's figures.

And higher COE prices will naturally favour sales of premium cars rather than bread-and-butter brands like Toyotas and Hyundais, the paper said.

Mr David Ting, deputy editor of motoring magazine Torque, told the paper that buyers and sellers of such premium cars "are better able to stomach expensive COEs than those of mass market brands".

In short, this group is less affected by prices. The COE price forms a smaller percentage of the price of a premium make as compared to a mass-market make.

At today's prices, an average 1,600cc Japanese car is more than $100,000.

Coupled with the premium makes expanding their model range (some even into the Cat A category), lowering prices and investing more in marketing and advertising, the German makes have overtook the Japanese names, Mr Ting explained.

He was quoted by the paper as saying: "I think this might be the 'new normal' going forward."

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