Car market roars back to life as dealers cut prices
TUMBLING premiums for Certificates of Entitlement (COEs) have jumpstarted the car industry, with dealers slashing prices by as much as $10,000 to woo buyers.
Customers started thronging showrooms since Wednesday's announcement and several deals have already been closed.
Interestingly, the used-car market, which has seen sluggish sales since the drastic curbs on car loans last year, is also expected to have a respite.
Some car buyers are now eyeing a cheap set of wheels to last for the next two years, when prices are expected to slide further. After that, they hope to buy their dream car.
The latest tender saw COE premiums for small cars up to 1,600cc in Category A dropping to a 21-month low of $60,002. Those for cars above 1,600cc fell from $75,010 to $70,000.
Mr Eddie Loo, managing director of Car Times, which sells new and pre-owned cars, has sold 10 new cars over the past two days. The dealer sells an average of 60 cars a month.
More visitors are expected at the showrooms this weekend, said Mr Loo, and the dealer is throwing in promotions, such as extended warranties for used cars and free Global Positioning Systems, to clinch deals.
Mr Loo has also slashed the prices of Category A cars by $10,000. A Honda Fit 1.3, for example, now costs $89,800, down from $99,800 before.
More COEs are expected to be released in the next few months, but car dealers are already dangling carrots to convince customers not to wait.
For example, Nissan agent Tan Chong Motors are reducing the prices of its Category A cars and its Category B cars by $7,000 and $5,000 respectively, said its general manager, Ron Lim.
The price of a Nissan Sylphy 1.6 has gone down from $116,800 to $109,800, while the Nissan Teana 2.0 is retailing at $141,800, down by $5,000.
At Honda distributor Kah Motor, prices for Category A cars have gone down by $9,000, while those of Category B cars have dropped by $4,000. A Honda Insight Hybrid 1.3 costs $117,900, down from $126,900.
A rise in the number of cars expected to be scrapped this year will help to drive demand.
An estimated 30,000 cars will be scrapped this year, up from 18,000 last year. Between next year and 2017, more than 100,000 cars could be scrapped each year.
"For those that need to get a replacement car in the next three to six months, they will probably not wait till the last minute to make their purchase... We are expecting them to jump in this round," said Mr Lim.
"The fact is the majority of the potential buyers now are those that will see their existing cars due for de-registration soon."
Singapore Vehicle Traders Association honorary secretary Raymond Tang said the used-car dealers are likely to sell more of their older cars, which have about two to three years left in their statutory 10-year lifespan.
"This is one of the better pieces of news we have got in quite a long time... Hopefully, things improve."