CHANGES TO VEHICLE TAXES, COE SUPPLY
High-end car buyers likely to wait; others may not
By Christopher Tan & Tiffany Ong

TO BUY or not to buy (now)?

This is the question that is splitting aspiring car owners following Wednesday's news of changes to vehicle taxes and COE numbers.

A straw poll by The Straits Times indicated that buyers of high-end cars are more likely to wait for the cut in the Additional Registration Fee (ARF) next month, while those eyeing mass-market wheels are going ahead and buying.

This is because the 10 percentage point cut in ARF spells substantial savings on a high-end car; savings for the bread-and-butter models are not big enough to make buyers want to wait.

Businessman Kevin Kwee, 37, who is due to take delivery of a Nissan GT-R and Maserati GranTurismo soon, stands to save about $9,000 and $12,500 on them respectively with the ARF cut.

'I will wait,' he said. 'Even if the COE price goes up, I don't think it will be by $9,000.'

But Mr Sulaiman Omar, 46, will not.

The sales manager, who is considering a Toyota, said: 'If I were to make a decision about buying a car, it would be based on necessity.

'If I really need the car, then the 10-point ARF decrease won't matter much to me.'

The cut will also not matter much to retiree Ronald Sim, 67, who said: 'I'd rather have a car sooner than later.' He, too, is looking at a Toyota. ARF savings for the models under this Japanese make range from $1,100 to $3,800.

The ARF cut, together with cuts to road tax and the number of certificates of entitlement (COEs) available, was among measures unveiled to shift some upfront costs of owning a car to usage, and to keep road congestion in check.

But buyers of mainstream models point out that if COE prices jump, most or all savings from the ARF cut would be wiped out.

IT manager Albert Nam, 30, said: 'If everyone rushes to buy a car once March is here, COE prices are likely to increase.'

Industry experts reckon COE premiums will start to climb from April, on the back of fewer certificates being released. This is because the number of cars scrapped - the key determinant of COE supply - is expected to fall substantially this year.

Mr Raymond Tang, secretary of the Singapore Vehicle Traders Association, reckoned the COE quota this year would fall by at least 20 per cent.

Fewer COEs almost always mean higher premiums. But by how much will they rise? Motor Traders Association president Michael Wong called that 'the million-dollar question'.

Another factor will figure in the picture to put a squeeze on COE supply from April next year: the halving of the cap on vehicle population growth to 1.5 per cent a year.

If COE premiums climb by $3,000 to $4,000 - which traders say is possible - the ARF savings buyers of most mainstream cars make will be gone.

Mr Mark Choong, managing director of Toyota distributor Borneo Motors, said consumers will have to make a judgment call: 'If the current price is within your budget and if it's a good offer, you should buy. If not, take the risk and wait.'

The negating effect of rising COE premiums aside, car buyers who wait for the ARF cut will face another downside - a shrunken scrap rebate when they eventually get rid of their cars. This is because the scrap rebate is based on the value of a car's ARF.

But retiree Cheong Kok Weng, 56, said this is 'all right'. 'The resale value of the car will drop anyway, so I might as well save on the ARF,' he reasoned.