Editor's Note #1

It’s already September which means it’s only just 3 more months until the end of the year.

Much has happened in 2022 in the geopolitical landscape that makes it almost as shocking as the Covid-19 year of 2020. The war in Ukraine, unimaginable inflation numbers, quantitative tightening, simmering tensions between China and the US and the energy crisis in Europe are all factors that will have ripple-on effects to the car industry far more than we’ve already seen.

Right now, car manufacturers are already raising prices - although mostly doing it quietly. It’s not uncommon to hear of certain options being taken out of cars or altogether made unavailable due to supply chain issues. Would you believe that many car parts are made in Ukraine including electrical wiring harnesses?

We have been paying ridiculous amounts for fuel and continue to do so, although it has taken a breather recently. Would it continue to escalate? It is anybody’s guess but ironically, it will take a recession to bring it down.

Used car prices have skyrocketed globally - and we’re not talking about just Porsches and Ferraris. The basic Toyota and Hondas are in shortage right now.

Thankfully, because demand is more or less easier to forecast in Singapore due to the COE system, we don’t have delivery issues as bad as elsewhere, where waiting lists for bread-and-butter cars can stretch to 2 years or more. If you walked into a showroom today to buy a commuter car, chances are you can still get the car you want in stock.

As a consequence, we do not have the situation of basic almost-new used cars selling for even higher than equivalent new cars. However, as we all know, COE has also increased tremendously. Right now sitting at near or all-time highs, it’s the best time to sell your car but also the worst time to buy one. Those with multiple cars bought during the 2020 low will be laughing to the bank now (an investment idea for YouTube finance gurus?).

It’s a bit of a ‘perfect storm’ year, 2022. Uncommonly high global pressures and domestic factors (wrong part of the COE cycle) have made it very difficult indeed to be a new car buyer. But this too shall pass; especially with regards to COE, which operates on a surprisingly predictable cycle. Look out for softening to begin in 2024, and we should see a trough again around 2028. Until then, hang in there.

By the way, I hope you like the Editor’s Note which is something new we are trying to do regularly. It is something different to our usual car content and hopefully gives you a different, more personal perspective! If you enjoy such content, please let us know and we may get more of our team to write their musings as well, if they so desire!

One shift at a time,

James

Credits:Text by James Wong; Photo by Justin Huang