Empty car lots, uncertain future

Empty car lots, uncertain future

SINGAPORE - Some used-car dealers are reporting brisk sales after being given a two-month reprieve from stricter rules on loans to buy such cars by the authorities.

At the Automobile Megamart at Ubi Avenue 2, a popular haunt for potential used-car buyers, once-full car "lots" are now sparse.

Each lot at the megamart has room for about 15 cars tightly packed together in neat rows. Now, many lots hold fewer than 10 cars each.

In a check with 13 car dealers at the Automobile Megamart and Turf City, seven said they had either sold all their cars or had only a handful left.

Mr Mike Wee, owner of Mayfair Motoring, said he had sold all 60 of his cars under the full-loan scheme.

Similarly, Mr Melvin Martin, a sales executive at Chicago Associates, said that of the 30 cars his company had for sale, only one was left. He added: "Sales have been tremendous since the loan curbs were temporarily lifted."

This is a far cry from the situation after the stricter financing rules that took effect on Feb 25.

The rules require car buyers to put a cash down payment of at least 40 per cent. The loan tenure is also down to five years from a maximum of 10 years previously.

This left second-hand car dealers in the lurch as potential buyers could not come up with enough cash. Many dealers also said they were losing money as they slashed prices to appeal to buyers.

Fortunately, the dealers appealed to the authorities and were given two months, starting from April 6, to clear their existing stocks under old rules which allowed full loans.

Though sales have been brisk since, they are not all smiles. This is because they are still making losses due to the slashing of prices so that the cars could be sold before the end of the two-month reprieve.

These losses range from $3,000 for an average car to $35,000 for a luxury vehicle.

Mr Wee said: "We have no choice but to slash prices and we lost some $200,000 from selling these 60 cars."

Dealers also said that they are buying fewer used cars and even if they are, they will be careful.

Mr Eric Ang, a manager at Excel Motoring, said that while his company previously took in about 30 used cars a month, the figure now ranges from three to eight cars.

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