Cloud over supercar dealers' future
SUPERCAR dealers here are fretting over their future as higher taxes, new car loan restrictions and a shift in tastes towards the less flashy send sales plummeting.
While the roar of high-octane engines is a familiar sound in central Singapore, home to the third-highest ratio of millionaires per capita in the world, supercar showrooms are largely silent.
Now, some dealers are setting up pre-owned divisions and throwing huge launch parties for new models in a bid to get business back on track.
"If this situation continues, we believe that supercar dealers will not be able to sustain a viable operation based on the huge infrastructure put in place, as well as the high cost of running the business," said Kevin Chia, general manager of Aston Martin Singapore.
While Singapore's car market is minute in global terms, its luxury car segment was, until recently, punching above its weight.
Last year, it was the third-biggest market in the world for bespoke Rolls-Royce sales while Porsche is among the top 15 selling car brands, something unheard of in Western markets.
But new taxes from March last year and curbs on car loans have sent sales of some supercar brands down by as much as 90 per cent, based on figures from the Land Transport Authority.
Two new Aston Martins, two Lamborghinis and 14 Ferraris were sold in the first half of this year - compared with 16, 20 and 64 respectively during the same period a year ago.
Last March, a new tax regime came into effect, taxing the first $20,000 of a car's open-market value at 100 per cent, the next $30,000 at 140 per cent and anything above $50,000 at 180 per cent. An Aston Martin Vanquish now sells for $1.088 million, compared with $880,000 previously.
"Even high-net-worth individuals who can still afford to buy supercars will think twice about paying a substantially higher price for the same model," said Melvin Goh, chairman and chief executive of Lamborghini distributor EuroSports Global.
Dealers are hoping new models like the Ferrari California will woo customers back and are turning to the used car market, where the tax regime is less prohibitive.
Higher costs may not be the only deterrent to buyers. As supercars have became more common, some connoisseurs are shying away from flashier brands.
"Where is the exclusivity? The days of the exotic are over," said a 42-year-old commodities trader, who already owns three supercars and declined to be named.
He is buying a BMW i8, a hybrid sports car, for $600,000.
"I bought the BMW i8 because I don't want to be seen as driving another supercar that half the people I know have," the trader said.