Despite my self professed identity as a petrolhead, I had never ever driven in a track in anger. All this changed last Saturday with a baptism by fire which no number of hours of GT5 on my trusty PS3 could have prepared me for.
Mini has always been a brand with sporty credentials so I wasn't too surprised when I found out they were organizing a track day to show off their JCW (John Cooper Works to the unaquainted) range of cars. The expense of entry was quickly dealt with a bout of self rationalization that Lady Gaga or JLo tickets are more expensive and company for the drive up north to Pasir Gudang circuit was easily found in an equally enthusiastic friend. After a rather uneventful journey only enlivened by a GTR that smoked the hell out of my car, we arrived at the Pasir Gudang Pits which rather resembled a Mini Showroom
Even if you are one of those people who see eye to eye with Howard Hughes and avoid the outside world like the plague, if you live in Singapore, you have definitely heard of the MAS restrictions on vehicle financing over the last two days. If you are slightly more involved, you would have heard everyone and their uncles talking frantically about how this is the biggest upheaval to hit the car industry since indeed the COE system was introduced 20 years ago.
. The car forums have been abuzz with an intensity that could probably power a small city and the multitude of opinions offered on this subject would shame most election debates.
However in this madness, there does seem to be some consensus. Everyone agrees that COE will fall from its current levels and I would say rightly so. When you take away credit so drastically both in terms of magnitude and tenure (100%-50% & 10yrs to 5yrs), buying power & consequently demand will be dealt a double blow.
How much will COE fall to? Well there’s no point trying to guess that without two data points. What percentage of car owners do avail themselves of credit beyond the new limit & till what extent? And also what percentage of these car owners would have available liquidity to the extent of what we are talking to do a down payment for a new car in today’s world.
Since the former data point is the reserve of a select few in the finance industry and (I’m guessing) the government (I belong to neither group sadly) and the latter is anyone’s guess, I’ll steer far away from guessing future COE levels. 50K?40k?$2??...Go with whichever number makes you happy, but rest assured the days of $90K COE are long behind us
What I will try and do is try and give some practical (and analysis driven) advice on what’s your best way forward depending on which part of the Singapore motoring cycle you happen to be in.
1) Mr/Miss High COE, high Loan:
Sadly this is the category I fall under, i.e. you have bought a new car at high COE in the last two years. And I have a word for what we are. SCREWED!!
Haha, actually there’s no reason to be quite so dramatic though reality is this. The resale value of your car is going to fall through the floor as new cars get cheaper. This coupled with your high loan levels mean that you will probably be looking at top-ups with numbers with lot of zero’s behind them to clear your loan if you need to sell your car anytime, EVEN in the next 5-6 years unless policies change dramatically again. Don’t believe me? Calculate your paper value (its quite a simple exercise) and your loan outstanding at different points of time. Cause there ain’t no dealer who’s gonna offer you much more than paper value if new cars are so cheap. Personally for me, the difference is more than $10K even after 5 years of ownership.
And the best part is the double whammy. If you want to change your car, not only do you have to top-up your loan but you need to foot the 50% (or 40%) down payment for the next car as well. Given your proclivity for not wanting to/ being able to pay a lot of cash upfront (I am guessing since you took a high loan), this will be a pill, possibly too bitter too swallow.
So my advice. Love your current car like a family member and take good care of it. Chances are your car will be old enough to go to middle school by the time you can afford to get rid of it. There is a bonus from this though. You can do whatever the hell modification or personalization you want with your car as resale value is screwed anyway. So if any of you ever wanted leopard print seats and purple velour in your car, now is the timeJ
2) Mr/Miss Newbie
For the person or family who has just managed to get affluent enough to afford a car or more likely, the recent move may feel draconian. How the hell are they going to foot down several 10s of Ks when their finances have already been stretched by other er. Cooling measures (property anyone?;)). Many people who fancy themselves as society’s prudence inspectors say this is a blessing in disguise, if you can’t afford the 50% down payment, you damn well shouldn’t be buying a car in the first place. But I beg to differ please dear sir. The financial system exists for a reason and while I agree that 100% loans over 10 years with low interest rates may be inviting trouble, something closer benchmarked to what many other countries do (of the top of my head, I think of 20% down payment, 5 years repayment) may be prudent enough. Anyways before I start a flame war beloved by the internet, I’ll change the topic
Mr/Miss Newbie, there are some seriously under-rated and cheap >7 yr old cars out there on the classifieds, fit for every budget, demanding little more than a 10-15K downpayment (I will play prudence inspector here and say if you can’t afford to pay $10K, you shouldn’t buy a car. No, just joking. It’s your choice, what you do with your moneyJ). You have hatchbacks, saloons, mpvs, even sportscars. Yes, you will compromise on brand and battle market perceptions but there are deals to be had. My top pick, though albeit a bit biased as a good friend just bought one for a short term drive, is the Opel Astra 1.6 or 1.8 hatchback. You can pick up a 2004 or 2005 one at less than $25K. Opel’s are quite undervalued in the Singapore used market and I don’t understand for a life of me why. This Astra for example has ridiculously solid build quality (the door sound will put my new Alfa to shame), really comfortable seats and interior(comparable to a Golf which Singaporeans seem to love) and a reasonably power fuel efficient engine. Yes, my friend has had to spend a k or two on some checks and some parts replacement but he is beyond satisfied. He swears its all the car. And in case you are wondering, this guy’s last two cars were a Mazda RX8 and an Audi S3
So if you absolutely need a car, buy a PARF car, drive it for a couple of years and hopefully by then either you’ll be more cash rich (getting the 10 year PARF rebate will help) or policies will change (I can dream, can’t I?).
3) Mr/Miss Low COE Wait and Watch
So you got lucky and were one of the few people who could afford to buy a car in the after math of the credit crunch in 2008, 2009 or even early 2010 and now your backside is just about starting to get itchy. Well, the government just handed you an early or late birthday gift, didn’t they? Yes, the downpayment part is irritating but hey, if you could afford to buy a car four years back, chances are that you do have some money lying around especially since your car didn’t cost an arm or a leg. So the best thing for you is to continue doing what you were doing. Wait and watch until COEs come down to make new car prices palatable again. Yes, you won’t get the amazing resale value you thought you were getting in high COE years but if you had actually ever approached a car dealer, you would have realized that most of the amazing value of used cars was being pocketed in swelling dealer margins than their original owners.
So congratulations. I envy you!!
4) Mr/ Miss Cash Rich
Haha, I can offer little advice to you. You are snickering all the way, waiting for COE prices to fall before you go and get your dream car. Just remember, they have sneaked in the ARF increase as well while everyone’s distracted by the Financing restrictions. So it won’t impact a Honda or a VW too much, but if it’s a Porsche you have been eyeing, be prepared to pay through the nose.
Please note. It is not this authors intent to offend though in case you are, please take a chill pillJ
This is a really good and an informative post. I am an Aussie newbie to car ownership and your article is great at putting things into a clearer perspective! Singapore has the easiest tax code, ye...
This is a really good and an informative post. I am an Aussie newbie to car ownership and your article is great at putting things into a clearer perspective! Singapore has the easiest tax code, yet buying a car is so complicated!!!! Arent there more egalitariam ways to own a car or property in SG?
But having said that, it is only recently the government is working on (but dunno how long) fine tuning the policies. The COE and ARF in the past (and still is at the moment)...
Welcome to Singapore!
But having said that, it is only recently the government is working on (but dunno how long) fine tuning the policies. The COE and ARF in the past (and still is at the moment) a blunt tool to solve Singapore's car woes.
So they say BMWs are sporty. Mercs are comfortable. Audis are for the sophisticated lot whereas Lexus is the last word in refinement. Volvo's are safer than your average nuclear bunker while Jaguar spells class with a capital C. Different brands for different people so that everyone from Doctor Phil to Doctor Dre can be rest assured that their choice of car is true homage to their personality. All's good with the world of luxury motoring. Until you start peeling the layers.
Like when you read car magazines and realize that the BMW 5 series and 7 series are no longer the last word in handling or driving pleasure in their segments as was once taken for granted (the Jags have taken over and the Mercs and Audi's are not far behind), choosing to excel at more boring things like fuel economy, emissions and even interior comfort instead. That's when you notice that Lexus have a relatively newly formed F Sport division, which churned out the LFA and ISF but seems to be more busy churning out 'sporty' F versions of their previously un-sporty GS saloons, being the latest to ape BMW's M Sport packages for their regular cars after Audi's S Line and Mercedes AMG sport packages (whew! that was a long sentence. Don't know if you got all of it). Uninvolving handling on an Audi or Mercedes is becoming a thing of the past and even boring old Volvo have the Polestar tuning division which has just churned out a S60 mental enough to scare all except those with balls hardened in the frozen Scandinavian north. However on the flip side, BMW have abandoned their "Ultimate Driving Machine" tag-line for a much more flowery "Joy is BMW" and professing to the world about how they are eco and family friendly
These developments on the face of it are unusual. On one hand, you have got everyone trying to ape BMW hoping to get even a smitten of their sporty pedigree but BMW themselves, have taken a virtual about turn, taking a leaf out of Merc ,Lexus's or even (gasp) Volvo’s book. It's like everybody's kind of met in the middle somewhere where luxury cars have sporty credentials and are fun to drive but don't compromise on creature comforts and to borrow a top gear term (as I often do), are polar bear hugging as well.
Which sounds good in principle you would say. All the benefits but none of the compromises. Now you can have your cake and eat it too. Maybe..
What has happened is that all of these companies have done a very good job at identifying their primary customer. This much younger customer (compared to the luxury car buyer of yesteryear) wants a comfortable, well built and eco-conscious luxury car but still wants that sporty image that in their mind separates them from the more 'boring' conformists (though buying a luxury car, especially a Teutonic one, is the most conformist thing you can do) and who doesn't entertain the belief that they could have given Schumacher a run for his money had they chosen to don a racing suit than a corporate one. Everyone excels in giving this customer exactly what he or she wants. And that’s where things get sleep inducing.
Because all the luxury car makers are essentially targeting the same person, their propositions are getting increasing similar, almost identical. Yes you have design language differentiating the cars but the way their very different brand equities of different companies use to dictate more 'technical' choices (packaging for example) has been lost. If you conducted a blind test on these cars (assuming you can drive a car blind), it would be almost impossible to identify which was which. The individuality and consequent eccentricities that came with each brand and gave it its very distinct characters, are slowly fading away, dissolving into a pool of perfection.
Which was not always the case. Flashback back to the 80s and 90s, you'll find that large BMWs (even as late as the E34 5 Series) were infamously cramped for rear legroom compared to their rivals. Hell if you wanted the ultimate driving machine, you lived with such 'inconveniences' in exchange for that steering feel and perfect weight distribution. The W124 E Class of the 90s had a ride-quality that today's W211 can only dream of (I am quoting a leading overseas car magazine here who compared them a couple of years back). Lexus would probably have had a department dedicated to eliminating that awful noise made by the internal combustion engine which spoiled the serenity of their perfectly engineered interior and anyone who mentioned the world ‘sport’ would probably have been fired. It was a purer time when both consumer knowledge and technology had only evolved so much and consequently different manufacturers made different cars with their own individual characters.
Maybe I have got it all wrong . It's probably much better that all your choices are so well rounded that you just can't go wrong with your luxury car no matter which brand tickles your fancy. I am probably a twenty-six year old dinosaur but I still feel that when you try and be good at everything, it's not so interesting and emotionally involving anymore. It's like bands. Yes U2 has been around for a million years and have been consistently good despite playing across genre's but which dyed in the wool head-banger won't choose to watch the dysfunctional Guns and Roses (if they ever got back together) over them.
Music actually gives me the perfect analogy. I consider electronics, which have played no small part in making modern cars as competent as they are, the automotive equivalent of auto-tune. Technically, on paper, auto-tune should be the best thing in the world, correcting your pitch, so that you are perfectly in tune. But give me Jim Morrison's half slurred, only vaguely coherent musings over Justin Beiber's best effort any day!
The truth is growth in the automotive industry is scarce and everyone is forced to target a bigger audience to get the growth that shareholders demand. Everyone has abandoned their core equity and ...
The truth is growth in the automotive industry is scarce and everyone is forced to target a bigger audience to get the growth that shareholders demand. Everyone has abandoned their core equity and strived to enlarge their pie.. For me the biggest lost in this is Honda, whose core has always been "racing". The words of the founder, without racing, there is no Honda - that cannot be anymore true in today's world - all the H fanboys are disappointed and the dismal sales followed.. rnrnIt is always easy to comment in hindsight, but niche positioning will not get the scale needed to compete in today's economic climate... But there is a silver lining, and the winds are favorable in the Huayra!!!
Utkarsh has an acute case of the car infection. In his elusive search for automotive perfection, the Alfa 159's passion and soul is his current stop after two yrs of German precision with VW & BMW. Design Engineer by training, Brand Marketer by profession and Car Designer in his childhood dreams, he offers a unique if a touch analytical take on anything automotive that catches his fancy.