High-end luxury car market hit hard

The bottom may already be falling out of the high-end luxury car segment because of the gloomy economy, but Indonesia's tax amnesty scheme seems to be exacerbating the situation.

This segment groups super sports car and ultra luxury limousine brands, namely Ferrari, Lamborghini, McLaren, Aston Martin, Rolls-Royce and Bentley.

From January to August this year, a total of 91 of these cars were registered here, according to the Land Transport Authority. This is down 27 per cent or about a quarter from the 125 units registered in the same period last year.

This is in stark contrast to the total year-to-date registrations for the overall car market, which soared 71 per cent from 33,673 to 57,468.

According to some dealers, the high-end luxury car segment has been particularly quiet in the past couple of months since the start of the Hungry Ghost Festival, a period when prospective buyers traditionally refrain from making big-ticket purchases.

Pang Cheong Yan, managing director of Wearnes Automotive, said: "Generally, people are becoming more cautious as they are not sure how long this current economic climate will continue."

Mr Pang, who is in charge of the Aston Martin and Bentley brands, added that it did not mean that this group of buyers is "less rich".

"They are just not willing to spend on discretionary items."

Melvin Goh, chief executive officer of EuroSports Global, said that the wealthy are being "more careful with their spending". EuroSports distributes Lamborghini and Zonda, among other brands.

Mr Goh said: "Business sentiment is weak and this has affected the Lamborghini business. Fortunately though, we have the LP580-2 Coupe and Spider priced below S$1 million and these are still selling."

Mr Goh explained that the S$1 million mark is a psychological barrier for many people, so anything just below it becomes a "magic number".

Besides the economy, however, some dealers said that Indonesia's tax amnesty scheme is also hurting their business.

The director of a high-end luxury brand, who declined to be named, said that as many as 30 per cent of his customers are wealthy Indonesians and "this group is gone".

He said that many are "scrambling for cash" to pay the taxman after having declared their assets to the authorities.

"As for the rest who still have spare cash, they won't spend until they are in the clear."

The head of another high-end luxury dealership agreed. He said that while the large majority of his customers - up to 90 per cent - are Singaporeans, some of the remaining 10 per cent are also feeling the heat from the tax amnesty issue.

"For now, they are not going to be seen spending any of their money on expensive cars."

5 confusing aspects of the Government's car ownership initiatives

  • The recent very conflicting announcements and policies regarding cars and car ownership in Singapore have left so many of us baffled and lost.
  • The whole car-lite initiative has come together with things like the surge in COEs and the easing of car loan rules.
  • Here are things the authorities have done regarding car ownership that have left Singaporeans quite muddled.
  • 1. Waxing lyrical about car-lite Singapore

    While the car-lite vision is something pretty noble in nature, I wish the authorities could be more realistic about it.

  • 1. Waxing lyrical about car-lite Singapore

    Constantly showing car-lite Sundays doesn't boost the general populace's confidence in achieving the bold goal, either, as most working adults do not work on Sundays.

  • 1. Waxing lyrical about car-lite Singapore

    Trying something revolutionary like car-lite Mondays might give us a better idea of how this really works on days with a larger amount of traffic.

  • 2. Raising car park charges

    Even if you don't drive, you must have heard the most recent blast of news that parking in Singapore is going to become more expensive, starting from December 2016.

  • 2. Raising car park charges

    The authorities put forth that this initiative is to curb car ownership in Singapore. But nothing has been mentioned about carpark charges for those who live in private properties, who are the ones with the money to buy multiple cars.

  • 3. Making it a lot more appealing for people to take up car loans

    The move to ease car loan rules by MAS is the ultimate contradiction for the car-lite vision the government is rooting for.

  • 3. Making it a lot more appealing for people to take up car loans

    Increasing the borrowing limit to 70 per cent of purchase price and extending car loan tenures to a maximum of 7 years may raise the demand for cars in Singapore.

  • 4. Allowing COE prices to climb

    Nobody can drive without at COE in Singapore, so why not just clamp down on the number of COEs that are put out for bidding?

  • 4. Allowing COE prices to climb

    COE premiums across all car categories have risen after the latest tender. Those pertaining to cars rose by almost 17 per cent in June.

  • 5. Building more and more roads

    The biggest upcoming project by the Land Transport Authority is the hyped North-South Corridor. This expressway is said to be integrated with dedicated bus lanes and cycling routes.

  • 5. Building more and more roads

    More roads translate into a greater capacity to accommodate more cars. Talking about curbing car ownership is one thing, but going around things to allow for more cars is something else.

This article was first published on October 03, 2016.
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