Wearnes sees luxury car brands driving sales

Singapore's economy may be limping through a slowdown, but the demand for fancy cars has not slipped.

Wearnes Automotive - the exclusive dealer here for luxury brands such as Bentley, Jaguar and Aston Martin - has had a strong year as it celebrated its 110th anniversary.

"The premium brand market is expected to hit 18,000 cars this year - a record high. So it has really been a good year for the industry," Wearnes chief executive Andre Roy told The Straits Times.

"For us, most of our brands - Volvo, Jaguar, Land Rover, Infiniti - hit new sales records in 2016, with Volvo in the lead with almost 1,500 cars sold this year."

The local car sales business is ruled in large part by the ebb and flow of the certificate of entitlement (COE) system.

"COE demand always exceeds supply and if the demand weakens, COE prices drop, in which case people will rush in to buy cars. So car sales in Singapore are pretty much delinked from the global economy and recession cycles," said Mr Roy.

But it is hardly a static landscape.

The sales volume next year will likely come off from this year's peak, partly because of the lower number of expiring COEs, he noted.

More importantly, there are nuances in customer demand to respond to.

"The absolute number of car sales can be anticipated, but the mix of what people buy - that can change depending on government rebates, financing terms or changes in COE allocation," said Mr Roy.

One market trend is a growing preference for entry-level purchases within the premium segment.

Wearnes' research shows that the share of entry-level cars - those priced less than $160,000 - rose from 43 per cent of the whole premium market in 2014 to 54 per cent in 2015 and 59 per cent this year.

The company has also observed that demand for sport utility vehicles and hatchbacks is rising, while interest in sedans is cooling down.

"So people are still buying premium cars, but more at the entry price levels. That is why we have seen stronger sales in the Volvo V40s, the Jaguar XEs and the Infiniti Q30s, for instance. For SUVs, our Land Rover is a strong competitor," noted Mr Roy.

"And this is the market advantage that we have - a wide product range that can meet the different needs of this market segment."

Wearnes carries eight brands in Singapore, commanding about half of the company's total sales volume.

It is also present in six other markets, including Malaysia, Indonesia and China.

The company, founded in 1906 by Australian brothers Charlie and Theodore Wearne, was part of United Engineers until it was sold to Malaysia's StarChase in 2014.

Mr Roy, who has been the head of Wearnes since 2012, wants his team to focus on improving business efficiency and expertise because while the Singapore market is lucrative, it is also too developed for big growth opportunities.

"For one thing, almost all brands that produce cars in right-hand drive are already here, so it is difficult to see big brand introductions, like what we had in 2015," he said, referring to Wearnes taking over the Aston Martin dealership then.

"We have to keep optimising the way we do business, the way we sell and the way we service our customers, who are more discerning about their car-purchase decisions.

"For instance, while we used to rely on monthly surveys to understand customer demand, now we do them instantly over mobile devices with visitors at our showroom, and we also have data analytics folks to look at the data."

Meanwhile, Mr Roy and his team are exploring opportunities in other new regional markets such as Myanmar and Laos.

But before that, Wearnes customers can expect some changes at its swanky Leng Kee Road showroom.

"We have plans to double the capacity of our service centre here, something that I think can happen next year."

whwong@sph.com.sg

This article was first published on December 27, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.