Deregistrations fall, pointing to slower sales of new cars ahead

[Ahyoo2002]

Deregistrations fall, pointing to slower sales of new cars ahead

 

Dealers of Japanese cars may be hit hard as Cat A leads drop

 

THE first nine months of 2007 were characterised by a remarkable reduction in the number of deregistrations, and this could point to a slowdown in new car sales for the near future.

 

This drop in cars being scrapped means that in the short term, there will be fewer buyers of new cars because fewer owners are replacing their vehicle for a new one, say some motor distributors.

 

'The drop in Category A deregistrations is even more pronounced, and since this is the bread and butter category which accounts for volume sales, it could hit us badly,' says the senior executive of a popular Japanese dealership.

 

Cat A certificates of entitlement are used to registers cars below 1,600 cc. Since the beginning of the year, there has been a 31 per cent plunge in the number of deregistrations. In January 2007, 4,425 cars were taken off the road. In August, the number was just 3,058.

 

For Cat B - cars above 1,600 cc - it was 2,532 cars scrapped in January and 1,809 in August.

 

Fewer cars are being deregistered these days after the Preferential Additional Registration Fee (Parf) benefits - or scrap rebate - were lowered for cars registered after May 2002. Then in 2003, the government eased restrictions on car financing and the liberalisation led to the industry offering 100 per cent loans and 10-year repayment periods.

 

Car owners who took auto financing with such conditions later found it difficult to settle their outstanding loans if they wanted to trade in their cars for a new one. 'There are no new hot, mass-market models to get people excited. There has to be a real incentive to draw them into the showroom,' says one sales manager.

 

He adds that one such incentive could be if the COE premium suddenly dives, like it did for Cat A in the second half of August.

 

'But when that happens, people rush in to buy and push the premium up again. Then everyone holds back because the COE premium is now so high. So car bookings cool down and market becomes lacklustre again,' he says.

[Ahyoo2002]

wah lau, no one keen at all

[Gz0707]

bro same topic as ur previous one, no need repeat same comments mah ...

"October round 1: Sales slowdown brings COE pullback"

anyway if many pp stuck in loans ... what more is there to say ???

[Gz0707]

okok i contribute a bit, give face, ok?

 

In 2004 when ARF component was dropped from 130% to 110%, the cost of purchasing a new car has decreased, together with lower bidded COEs. With lower new car prices and a "better if new" mentality, many have switched to newer cars and even longer loans esp when the 30% deposit rule was dropped.

 

We are now seeing the result of 1) previous car owners who are now stuck in long term loans and 2) entry of 1st time buyers who will also take long term loans as they cannot afford new cars otherwise. Now the key question for agents is ... how many more 1st time buyers can they get, or how many current owners have reached breakeven and afford a new car? Hence u see reports on strong buying in low priced cars such as China cars or high end cars where price not a big factor for well off buyers.

 

The middle segment is the screwed one. And that shd be u and me.

Edited October 5, 2007 by Gz0707

[Ahyoo2002]

hehe, slightly different lah, this one talk more on de-registration

[Ahyoo2002]

hehe, good comment,

 

but hor:

1) I am not stuck in long term loan

2) My car break even long time back and can get cash back if I change now

 

But I agree that a lot of people are stuck with this two conditions

[Gz0707]

me abit regret too ... now i feel i shd have used my cash residual value to buy a cheap cheap cheap car in full, now just have to tahan a little longer to clear current loan. Am now warming boss up to idea that next car shd not be new anymore ... better value in the resale mkt if pp are willing to look and negotiate ... not withstanding the high I/R rate of cos ...

[Gz0707]

heres some info relevant for de-reg, u can see why de-reg cannot go on forever as the PARF keeps dropping. The policy makers knew this, the trade knows this. But still the "promise" of more affordable new cars has been kept ...

 

before may 2002 - 80% PARF

May 2002 to Mar 2004 - 65%

from Mar 2004 onwards - 55%

 

2nd hand car buyers must be aware of the above in casee kena snooked by SE ....

[Nus24]

I heard this argument "If one is not in 10yrs loan and one downpaymant more $ and thus will not be stuck in 'negative' value when one sell the cars."

 

Does this means that such people are able to change cars anytime they want?

 

But lets not forget that these people are usually capable enough to afford to pay higher downpayment in the first place. But then again, when they change car, they will still suffer $$$ losses, its just that they do not feel the 'pain' of paying additional $$ to clear the outstanding loan, simply because they already felt the pain initially when they paid a higher downpayment.

 

Ok back to the news article.....I can see the writer goes the other way if the COE were to raise. The writer will claim that the good economy and no increase in COE quota cause a higher demand than supply and the COE will go up and up in future......

Now that was the general feelings I heard last month from the car dealears and news reports. But then somehow, after the last bidding...the sentiments suddenly change??

 

Today I heard LKY warned Singaporeans not to be complacent over the sub-prime issues. I think LKY's words is worth listening to as he would know the 'true' situation of Singpore inc outlook for next year.

Edited October 5, 2007 by Nus24

[Ahyoo2002]

car delaers have 101 ways to cheap you

[Ahyoo2002]

Ok back to the news article.....I can see the writer goes the other way if the COE were to raise. The writer will claim that the good economy and no increase in COE quota cause a higher demand than supply and the COE will go up and up in future......

Now that was the general feelings I heard last month from the car dealears and news reports. But then somehow, after the last bidding...the sentiments suddenly change??

 

Good one

[Seaweed]

agree

[Bigtoothpick]

Good 1st point. I don't owe money on my car now, but I don't have any financial incentive to change it. If I sell now, i'm looking at about $21K loss over 2.5 years. Some more the same model now selling at $6K more than what i paid for, so I consider my current ride already quite "cheap".

[Ahyoo2002]

good that you think this way, a lot of people never think or count how much they lost if they change now, they only concern how much to pay every month.

[Silver_blade]

I'm happy to see such trend which I feel should be the way to go. Tho some are holding on to their car not cos they want to...but cos they couldn't afford to pay off their debt.

 

I find the previous trend of selling relatively new car, usually around 3yrs old, then buy another new car.....is an insane way to spend one's wealth. Especially so when the economy was generally lousy.

 

I hope after this latest trend...more people will learn to accept that cars can last much longer then they tot and realise that they will get better value from their car the longer the keep it.

[Ahyoo2002]

well said

[Newkid]

when i changed my car i feb this yr, my old car lost $33k in 3 yrs i took the pain bcos the old car coe was $25K and the car parf was the one b4 mar 2004, and the low coe then prompted me to take the dive. now i think i cannot change car for the next 5 yrs at least....low coe and parf value means lugi too much.

[Check13]

bro, it can be a good thing if you are the type with no or little discipline.

 

the earlier one breakevens, the earlier his backside itchy and the earlier he will change to a new ride. And lose big big of course without even really realising it. So big that chances are, it's more then the additional int for one who's on long loan but drives much longer.