Drive away in a super car with short lease
DEALERS of new and used super-sports and ultra-luxury models are turning to creative leasing options, with demand for such cars remaining weak as a result of loan curbs and progressive taxes.
These include cutting leases to as short as a year or extending them to as long as eight, as well as number plate retention and insurance "no claims discount" (NCD) services.
Vehicle leasing used to attract mostly expatriates, with lease periods typically between three and five years, tied in with their length of stay here.
But sales of such high-end cars have been in the slow lane on the back of soaring sticker prices and credit issues, after the Government introduced car financing restrictions and a tiered registration tax structure in February 2013.
The financing curbs require a 50 per cent cash downpayment and a maximum repayment period of five years for car loans, a change from zero downpayment and a maximum 10-year tenure.
And under the tiered registration tax structure, the additional registration fee (ARF) has become a progressive tax, with the ARF for a car with an open market value (OMV) of up to $20,000 being 100 per cent; the next $30,000 of the OMV now attracts a rate of 140 per cent, and any value beyond $50,000 is subject to a rate of 180 per cent.
To get around the higher downpayment requirements, Motorway Group cut the lease period to just one year.
Motorway is the authorised distributor for exotic Koenigsegg, and is one of the biggest dealers of pre-owned super-sports cars and ultra-luxury limousines.
For example, a four-year-old Lamborghini Gallardo Spyder LP560-4, valued at about $500,000, can be leased for 12 months at $14,100 a month with zero downpayment and a three-month refundable deposit.
Motorway, which also leases new supercars, introduced the yearly option two months ago.
Chief executive Michael Lim, said: "The aim is to allow people who dream of driving such cars the opportunity to enjoy this lifestyle. What is also good for the customer is that he knows exactly how much the depreciation cost is."
For those who prefer a longer lease, parallel importer VinCar offers one that stretches an eyebrow-raising eight years.
The company introduced this option this year for a range of luxury and ultra-luxury cars such as the Bentley Flying Spur V8, and lets the customer "buy back" the car at the end of the lease, or break the lease.
Managing director Vincent Tan said: "This offer makes it more attractive to own an ultra-luxury car. The take-up rate is about one a month. It's not much, but is more than if this option wasn't available."
Over at Porsche, authorised dealer Stuttgart Auto expects leasing to pick up because it does not affect the total debt servicing ratio (TDSR).
Said Jason Lim, general manager of Stuttgart Auto, which is part of the Eurokars Group dealing with Rolls-Royce and Mini: "With loan curbs and higher ARF, households with one family car and one lifestyle car are more focused on replacing the family car because of the 50 per cent downpayment.
"But leasing frees up cash and provides alternative choices for driving your dream car."
To enhance the attractiveness of its leasing packages, which range from two to seven years, Eurokars Group offers its customers the flexibility of retaining their car registration number and insurance NCD.
But one industry source, while describing these leasing terms as "clever", pointed out that "it is unusual to see super luxury models being leased out for such short periods".
He added that shorter leases can be risky because the company must be able to lease the car out again to recoup its investment.
THE BUSINESS TIMES