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EXCESS stock of very high-end cars are said to be worrying some dealers, who are stuck with a higher-than-usual inventory of unsold units.
Motor traders selling super sports cars, ultra-luxury limousines and high-end sedans have been finding it difficult to sell their vehicles for nearly two years as a result of stricter vehicle financing restrictions and stiffer registration taxes, and are understood to be carrying more stock than they are normally accustomed to.
A source, referring to a prestigious sports car marque, said he understands that it has an inventory worth "in the millions".
He added: "Each of these cars has an OMV (open market value) of S$150,000 to S$200,000, so we are probably talking of at least 10 cars, or more than half a year's sales."
Over at a dealership selling ultra-luxury sedans, he said the numbers are higher. "There are at least 20 cars in stock. If you walk into the showroom now, registration is immediate, with a choice of six colours and various combinations of options," he said.
The industry's inventory has been steadily increasing since end-2013 and early 2014, following the Feb 25, 2013 introduction of loan curbs and the tiered Additional Registration Fee (ARF) structure.
The measures had required some time to kick in because it was still possible to avoid them initially, with existing Cat E open category COEs expiring only three months later. As a result, many buyers took the opportunity to "fast forward" their ultra-luxury and super sports car purchases.
But after prospective buyers stayed away, the reality of the stock situation hit home later last year.
A salesman at a super sports car dealership said: "Most of those who buy such cars can still afford to pay the new prices, but they don't feel good doing so.
"Even the latest model may not be enough to tempt some of them." He added that some customers who had ordered a new model launched by an Italian manufacturer had offered their allocated car to the next person in line when their cars arrived.
"The old model used to be about S$800,000-plus, but it now starts at S$1.2 million, or almost 50 per cent higher because of the higher factory price and taxes, so some decided not to take delivery of the car."
Despite the slowdown in demand, the salesman said some manufacturers have not allowed their dealers to cut orders.
"The principals want volume and they expect the dealers to manage the situation," he said. "So instead of carrying three months' of stock normally, it's now five to six months."
Looking ahead, he expects 2015 to be another gloomy year for the upper end of the car market - as long as the loan curbs and progressive ARF remain.
"It's going to be tough for most dealers. The only way out is to have a fire sale or to re-export the cars. Either way, somebody is going to lose money."