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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."