2013-10-09 14:43:34 - New Transportation market report from Business Monitor International: "Singapore Autos Report Q4 2013"
When the Monetary Authority of Singapore (MAS) introduced tough new restrictions on car loans in February, BMI said that Certificate of Entitlement (COE) prices would dip in the short-term but stay historically elevated (see 'Middle-Class To Bear Brunt Of Loan Curbs', February 27). True enough, although COE prices initially dipped, they have since rebounded and are now back above SGD70,000 (US $55,000) for both Category A (1600cc and below) and Category B (above 1600cc) cars.
Possible Reasons For The Recent Loan Curbs
While consumers have clamoured for restrictions on car loans in the past few years to cool the overheated COE market, we see the introduction of the new curbs by the MAS as more of a policy to encourage financial prudence
among buyers and lenders than as a tool to target COE prices directly. As COE prices have gone through the roof in the past few years, it does not make good financial sense to take out a 100% loan on a new car whose value is going to depreciate at an accelerated pace in the first few years.
Full Report Details at
Narrow COE Differential Will Bolster Premium Car Sales
In our opinion, the small difference in prices for the two car categories will be one of the supporting factors helping luxury car brands to finish 2013 as best-sellers, similar to the trend observed in 2012. While premium cars do end up costing more when the total purchase price of the car, together with its higher ARF is taken into account, the narrow price differential between the two COE categories reduces the opportunity cost of owning a premium car, making the decision of owning a higher-end car easier for upper-middle class and wealthy households.
Motorbike Sales Enjoy A Resurgence
Motorbike sales have enjoyed a resurgence at the expense of declining car sales. BMI is bullish on 2013 motorbike sales growth and we have upgraded our forecast with 7M13 sales coming in strongly at 6,791 units. We now forecast sales to grow 11.0%, to 11,000 units, versus 8.0% previously. While small car COE prices have soared from 2010-2012 and hit almost SGD80,000 (US$62,900), motorbike COE prices are still at an affordable SGD$1,800 (US$1,400).
With sales of passenger cars (includes taxis) for the first seven months of 2013 reaching 15,014 units, we have downgraded our 2013 sales growth forecast to -15.0%, to around 26,000 units.
Over the 2013-2017 period, we forecast passenger car sales growth rates to remain lacklustre for the next two years before picking up in 2015 as a slew of COEs get de-registered, which will free-up additional supply in the market.
Sales of commercial vehicles (CVs) from January-July 2013 came in at 3,163 units. Due to the better than expected performance, we have upgraded our 2013 sales growth forecast to 25.0%, to 5,426 units. Besides a healthy pipeline of infrastructure projects, we expect the 'Early Turnover Scheme' introduced in April 2013, to boost sales as well. This scheme gives incentives to owners to replace their old CVs with newer environmentally friendly ones, with at least Euro V diesel standards.
Similar to cars, sales of CVs will pick up in the coming years, as more owners, which are facing expired COEs, come back into the market.
CNG Will Remain A Niche Energy Option
The potential re-zoning of the world's largest CNG station in Singapore sums up the dismal outlook for the fuel in the country. We believe the paucity of strong government policies, a lack of refuelling infrastructure and a small market will all cause CNG to remain a fringe fuel for a select group of motorists.
Report Table of Contents:
BMI Industry View
- BMI Industry View
- Business Environment
- Industry Forecast And Landscape
- Table: August 2013 COE Results (1st Bidding)
- Table: Sales Of Top Ranked Brands From January-July 2013
- Table: Singapore Automotive Sector Registered Vehicles: Historical Data And Forecasts (CBUs)
- Macroeconomic Forecast
- Post Global Crisis Rebound Proof Of Structural Resilience
- Economy Facing Unique Risk Of Worsening Labour Crunch
- Consequences: A Mixed Bag
- Cost Competitiveness At Risk
- Expenditure Breakdown
Industry Risk/Reward Ratings
- Asia Pacific - Risk/Reward Ratings
- Table: Autos Risk/Reward Ratings Asia-Pacific
- Company Monitor
- Asia Overview
- Table: Vehicle Sales May 2013 (Cbus)
Global Industry Overview
- Global Industry Overview
- Demographic Outlook
- Table: Singapore's Population By Age Group, 1990-2020 ('000)
- Table: Singapore's Population By Age Group, 1990-2020 (% of total)
- Table: Singapore's Key Population Ratios, 1990-2020
- Table: Singapore's Rural And Urban Population, 1990-2020
- Automobile Industry
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