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REVIEW 2015

Dealers see limited impact from slowdown

They also expect a bigger COE quota which will boost the market for cars in 2016
Saturday, December 19, 2015 - 05:50
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REVVING UP FOR THE NEW YEAR: Mr Cheah (above) feels that more owners are delaying scrapping their vehicles.
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REVVING UP FOR THE NEW YEAR: Mr Goh finds that luxury car sales are driven largely by new launches.
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REVVING UP FOR THE NEW YEAR: Mr Pang (above) says demand will still be more than supply.
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GOOD SHOWING: Nissan is having a good run in 2015, with sales expected to almost double that of last year and market share is expected to hit almost 10 per cent.
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'Overall, the motor industry will do well due to the increase in the COE quota, as more COEs mean more business.' - VinCar’s Vincent Tan
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'Eurokars Group will continue to focus on customer-care initiatives and upgrade our infrastructure to cater to the long-term growth of our business.' - Eurokars Group's Ong Lay Ling
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'The success of our Nissan crossovers - Juke, Qashqai and X-Trail - was the main driver of our sales, and we expect them to continue doing well into 2016.' - Tan Chong Motor Sales' Ron Lim

Cheah Kim Teck

Managing director of business development, Jardine Cycle & Carriage, authorised distributor of Mercedes-Benz, Mitsubishi, Kia and Citroen

How big will the COE quota be in 2016?

Technically, based on the number of vehicles available for scrapping, the COE quota should be about 100,000. But my gut feel is that more and more owners are delaying scrapping their vehicles, hence my guesstimate COE quota will probably be about 70,000 to 80,000.

Will the slowing economy hurt car sales?

Surprisingly, the slowdown is not having a major impact on vehicle sales. The main reason is the replacement market and the fact is all vehicles are somewhat like a luxury item. You have to pay north of S$70,000 for a simple vehicle and if COE spikes up, you are looking at close to S$100,000.

How much will COE premiums fall in a downturn?

The COE premium will go up and down depending on supply. Hence, with more COEs in the next few years, premiums are likely to be lower than in the past few years.

What do you see for your business in 2016?

Not all would agree, but I personally feel the car is a luxury item, and the cost of purchasing a car supports this view. This pushes the customer towards the premium segment, and even more so in the future because there are more luxurious and well-engineered models in COE Categories A and B.


Nicholas Wong

General manager of Kah Motor, authorised distributor for Honda

How big will the COE quota be in 2016?

Based on the nine to 10-year-old cars still in operation and the delay in the deregistration trend, a conservative estimate would be that there will be at least 20 to 25 per cent more COEs next year than the whole of this year.

Will the slowing economy hurt car sales?

The slowing economy will affect the car market only in terms of price, because for some individuals such as sales people, a car is still a necessity and the COE quota will always be more than 100 per cent subscribed. Hence, only prices will be affected and perhaps the luxury segment would be hit if indeed the economy goes down.

How much will COE premiums fall in a downturn?

Yes, prices will definitely be affected, depending on how severe purchasing power gets hit.

What do you see for your business in 2016?

There is no doubt that the market size will expand significantly in 2016. This will be a big challenge for us as every brand will take advantage of the big market to improve their market share. We will do our best in this competitive market environment.


David Pang

Sales director of the Alpine Group, which distributes Opel and Chevrolet

How big will the COE quota be in 2016?

I think there will be an increase of about 40 per cent in the quota allocation.

Will the slowing economy hurt car sales?

Demand will still be more than supply. If the economy continues to slow down, customers will be more prudent and careful about how much they want to spend and on the type of vehicle they choose. Instead of a premium model, they may settle for a more modest buy.

How much will COE premiums fall in a downturn?

I don't see COE premiums coming down significantly. Having said that, customers will also not chase COE prices and will wait for a comfortable time to make a purchase. I think premiums will still range at about S$50,000 to S$60,000 for Cat A and B.

What do you see for your business in 2016?

We hope to also participate in the bigger COE pie going forward. Currently, our most important vehicle - the Chevrolet Cruze - is in Cat B, which has greatly disadvantaged us. For 2016, we will offer the new Cruze in both Cat A and Cat B, so this will help. As for Opel, you will see a transformation in the first half of 2016 as we work to launch several new models and improve our quality of service.


Melvin Goh

CEO of EuroSports Global, which represents Pagani, Lamborghini and Alfa Romeo

Will the slowing economy hurt car sales?

People may decide to put off their purchases until times are more certain. However, sales of luxury cars are driven largely by new launches. If a high net worth customer really wants the latest model and has been waiting for its launch, he or she will still buy it.

What do you see for your business in 2016?

Sales of Lamborghini has gone up this year as compared to last year mainly because of the launch of the Huracan model in late 2014. With the recent launch of the Huracan Spyder early this month, we have received many interested enquiries and we hope to be able to close some deals soon.


Vincent Tan

Managing director of parallel importer VinCar

How big will the COE quota be in 2016?

Based on the fact that roughly the same number of cars will be deregistered from mid-2015 to mid-2016, and from mid-2016 to mid-2017, and that this figure is around double that of mid-2014 to mid-2015, I am expecting the COE quota to increase commensurately.

Will the slowing economy hurt car sales?

People might hold on to their cars a little longer, if they can do so. If they have to buy a new car, I expect them to downsize or possibly even buy pre-owned models of the cars they are driving.

How much will COE premiums fall in a downturn?

It is hard to say. They should, but the bidding results from the last half-a-year or so have shown that accurate predictions are near impossible.

What do you see for your business in 2016?

Cat A cars and low-range Cat B models will do well. Overall, the motor industry will do well due to the increase in the COE quota, as more COEs mean more business.


Ong Lay Ling

Group managing director of Eurokars Group, representing Rolls-Royce, Porsche, McLaren, Mini and Mazda

How big will the COE quota be in 2016?

We project there will be an approximate 20-30 per cent increase in the COE quota in 2016.

Will the slowing economy hurt car sales?

In a slowing economy, consumers are likely to take their time when considering a big purchase such as a car.

How much will COE premiums fall in a downturn?

COE premiums will not fall significantly, but will experience a marginal decrease. As always, the COE premium is very much dependent on the overall quota available and whether the market is able to meet its demand.

What do you see for your business in 2016?

With the possible downturn in 2016, Eurokars Group will continue to focus on customer-care initiatives and upgrade our infrastructure to cater to the long-term growth of our business.


Ron Lim

General manager of Tan Chong Motor Sales, the authorised Nissan distributor

How big will the COE quota be in 2016?

The current projection is about 50 per cent more COEs for passenger cars, while COEs for commercial vehicles will remain flat, that is, similar to 2015.

Will the slowing economy hurt car sales?

Vehicle sales in Singapore have always been more a result of the COE supply rather than economic performance.

Moreover, similar to this year, the bulk of sales is actually coming from replacement demand rather than new demand as many owners have been holding back replacing their vehicles until it is almost time to scrap them.

Unlike new demand, which is more directly impacted by economic performance, replacement demand is usually less impacted by economic performance. So vehicle sales are likely to perform well alongside the expected expansion in COE supply.

How much will COE premiums fall in a downturn?

As replacement demand will remain strong, the only portion that could affect the overall demand equation is new demand. So if the economic situation becomes more difficult, the likely corresponding slowdown from new demand should lessen the overall demand for COEs, which will in turn increase the chances of COE premiums trending lower.

Any major drop in COE prices could be temporary as more replacement demand might come in earlier than expected, which will then push COE prices back up. The best-case scenario is for a gradual softening rather than any huge correction as the latter would be less sustainable.

What do you see for your business in 2016?

Thanks to the strong support from our customers, Nissan is having a good run in 2015, with sales expected to almost double that of last year and market share is expected to hit almost 10 per cent.

The success of our Nissan crossovers - Juke, Qashqai and X-Trail - was the main driver of our sales, and we expect them to continue doing well into 2016. For commercial vehicles, where Nissan has been the leader in the Light Goods Vehicle segment for five consecutive years since 2010, we also expect to continue to do well in 2016, riding on the strong demand from the Early Turnover Scheme (ETS).

For more of BT's year-in-review stories, visit bt.sg/review_15

READ MORE: New cars on the road likely to double this year

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