Motor groups want COE supply cut
In petition to Govt, they say plunging COE prices will cause the used-car market to collapse
By Christopher Tan, Senior Correspondent
MOTOR trade associations representing hundreds of car dealers are doing the unthinkable: petitioning the Government to cut certificate of entitlement (COE) supply in the wake of plunging prices.
The Singapore Vehicle Traders Association and the Automotive Importers and Exporters Association said nosediving COE prices - which culminated in a crash yesterday - will drive down the cost of new cars, killing the market for second-hand vehicles.
Mr Neo Nam Heng, president of both trade associations, said the sector is heavily reliant on used car sales and reducing the number of COEs is necessary to ’save the industry from collapse’.
He said motor traders attended an emergency meeting yesterday and agreed to petition ‘all relevant ministries, as well as the Prime Minister’ to reduce COE supply.
While they acknowledge that reducing COE numbers means lower new car sales, Mr Neo said ‘it’s a worthwhile sacrifice’.
‘If the used-car trade collapses, we won’t be able to sell new cars,’ he said, explaining that buyers usually have a used vehicle to trade in.
Yesterday, the COE premium for cars up to 1,600cc crashed to $2, down some $10,000 from the last round two weeks ago.
The price is the lowest since the quota system was introduced in 1990.
The COE price for cars above 1,600cc plunged to $4,889 while that for the open category COE, used predominantly for cars, landed at $6,889. Both are sharply lower than the year’s average of around $14,000 as the worsening financial crisis shakes consumer confidence.
The two trade associations, which have about 450 member companies, are proposing cutting the car COE supply by 25 per cent, to make bidding more competitive and to help stabilise premiums at $10,000 to $15,000.
The associations want the cut to be immediate and last for six months.
Asked why they could not wait till next April, when COE supply is expected to shrink anyway, Mr Neo said: ‘It will be too late.’
Used-car dealers hold an estimated 3,000 vehicles in total.
The two motor trade associations are making a few other appeals as well.
One is to reduce the goods and services tax to 3 per cent, from the current 7 per cent.
They suggested that the reduction last one year to help stimulate buying.
They also suggested making the transfer fee the Government charges each time a car changes hands ‘fairer’.
The fee is now a percentage of the vehicle’s estimated market price, which Mr Neo said works out to $3,000 to $4,000 for a Mercedes E-class.
He said basing the fee on the car’s open-market value - its price before registration taxes and COE - is better.
‘A car is already taxed when it is first registered. Why tax the taxes when it is resold?’
Another proposal is to allow cars less than three years old to be used as taxis.
This would help lift the used-car trade as well as ‘let Singapore have taxis that are cleaner than the diesel cabs we have’.
LINKED TO NEW CAR SALES
‘If the used-car trade collapses, we won’t be able to sell new cars.’
Mr Neo Nam Heng, president of the Singapore Vehicle Traders Association and the Automotive Importers and Exporters Association. He explained that buyers usually have a used vehicle to trade in.
Source : Straits Times - 20 Nov 2008
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