Used cars sell well due to private hire drivers
MORE used cars are being bought by drivers who want to work for private hire firms like Uber and Grab, dealers have told The Straits Times.
Ubi-based Yong Lee Seng Motor has been selling around 20 more used cars a month since January to such buyers, compared with last year - a rise of about 30 per cent.
I-Deal Auto Trading, in the Sin Ming area, now sells around 10 used cars a month to such buyers, as well as car rental firms and private car hire firms, a 50 per cent rise on last year.
It was a similar situation at four other dealers, including 99 Motors Trading and Prime.
Most buyers from Yong Lee Seng Motor intend to drive such cars part time. Its managing director Raymond Tang said: "They want to get extra income because the economy doesn't look good."
Car rental firms are also expanding their used car fleets. Diversified motor group Prime has about 240 used cars available for rent, but intends to increase that to 400 this year.
Hawk Asia Pacific has seen a 20 per cent rise in the number of people renting used cars for private hire this year. It has bought about 100 used cars since last year to cater to this.
Uber did not respond to ST queries while Grab said it does not rent cars to its drivers.
However, the easing of loan curbs announced by the Monetary Authority of Singapore last Thursday, which has made new cars more affordable, has raised questions about whether the trend towards used cars will be affected.
Dealers hold mixed views.
Some like Mr Tang, who is also first vice-president of the Singapore Vehicle Traders Association, thinks the number of private hire buyers will still rise and few will go for new cars as the downpayment required is still higher.
For instance, a new Toyota Corolla Altis 1.6 on sgcarmart.com costs $112,888 and will require a minimum downpayment of $33,866. A used version of the same model, registered in 2011, costs $64,800, with a downpayment of $19,440 needed.
One can also recover a larger proportion of a used car's cost if one scraps it in the short term, compared with a new car, said Mr Tang.
But Neo Nam Heng, chairman of Prime, stresses that a key factor is how COE prices react.
Already, demand for new cars is rising and will push COE prices up, he notes. Daily new car sales at his group have increased by 50 per cent since the announcement.
Higher COE prices make it more expensive to own a new car. People who want to drive for private car hire firms may then prefer used cars to new ones, he noted, adding that "in the next two, three rounds, the COE will likely shoot up by $5,000 to $10,000".
Park Byung Joon, adjunct associate professor at SIM University, said some private hire drivers will buy new cars instead, as the new measures improve their affordability.
"The COE prices may go up but monthly payment is going to get lower," he noted.
The used cars bought for private car hire normally have three years or below left on their COEs and cost $10,000 to $50,000, noted Mr Tang. Their scrap value ranged from $5,000 to $13,000.
Donovan Loh, 27, who sells food at night markets, bought a Honda Civic with about a year left on its COE last September and drives part time for Uber and Grab.
He did not reveal how much he paid for the car, but said he has been earning $1,000 to $2,000 a month on average - "more than enough" to cover instalments for his car and its expenses.