SG: Used car sales down due to restrictions set by LTA
The number of used cars sold in the first 3 months of 2013 has dropped 9.5 % to 17,407 units, compared to the same period in 2012. According to Singapore Vehicle Traders Association’s Secretary, Raymond Tang, the sales figures would stabilise right until the end of the 60 day loan curb period. He anticipates a further drop after the 60 day grace period. Right now, dealers are hoping to make use of the 60 day period to cover up some of their future losses. In an attempt to solve this issue, the SVTA is appealing to the Government and asking for more concessions. One of their suggestions include fixing used car loans at 80 percent, as compared to the 50-60% based on OMV.
The poor sales in 2013 is a stark contrast to the figures posted in the past 5-6 years. As a result of ths skyrocketing COE prices, the number of used cars sold increased from around 21,000 in 2006, to 77,727 in 2012, the highest in over a decade.
The plunge in the resale price may benefit new car buyers; due to the low resale costs, more may scrap than resell. This would lead to more COEs for new cars, which may drive the price down. In the first quarter of 2013 alone, nearly 4,240 cars were scrapped. This is a 19 percent increase compared to the last quarter in 2012. It is predicted that the COE Quotas may increase up to 25-30% in the period from August 2013 to January 2014. This increase in premium may drive up the number of used cars scrapped.
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