There are three things in Singapore that are widely known to be expensive: home ownership, medical bills and cars.
With regards to the latter, the government’s constant expansion of the public transport system, in addition to the stringency of acquiring a driver’s licence, imposed quotas on Certificates of Entitlement (COE), and luxury car taxes, makes their stance clear enough—
They don’t want more cars on the road, even if they make a killing off road taxes.
Now, cars are bound to become more expensive due to the delays in vehicle production, as the shortening supply against a rising demand causes the prices to surge.
Supply Chain Disruptions Abound
Car manufacturers have been facing supply chain disruptions for quite a few years, no thanks to the pandemic.
Owing to plant closures, shortage/limiting of labour, and insufficient shipping capacity, borne from COVID-19-related restrictions, vehicle production has slowed down significantly.
For Singaporeans, it didn’t matter as much during pandemic times since there weren’t a lot of places that we could go.
Dine-ins were limited to groups of two at most, nightlife businesses were completely shut down, drinking was prohibited after 10:30pm, mask mandates and social distancing made social gatherings a rather awkward and muffled affair.
At the turn of the new year, things became better.
The Safety Management Measures relaxed. Life was returning to pre-pandemic conditions. International borders reopened.
People had reason to travel again, and now eager, having been stifled for so long.
Then Russia decided to invade Ukraine, who is a major supplier of automotive components.
This began to cause more delays in production, which is predicted to worsen in the coming months as there seems to be no peace in sight.
If the supply chain disruptions weren’t bad enough, think about the rising oil prices and the effect that it will have on the production costs, the burden of which will inevitably be passed onto consumers.
What a time to be alive. (Note: sarcasm.)
Rise in Demand for Used Cars
Hence, the alternate solution to acquiring a vehicle is to scour the used car market.
According to the Land Transport Authority statistics, 17,698 used cars have changed hands in March and April, a 20% increase from 14,801 in January and February.
The Chairman of diversified motor group Prime, Mr Neo Nam Heng gave further insight into the situation, stating that there has been a shortage of new cars. If he were to order a car from Japan now, they would have to wait for seven to ten months for it to arrive.
In fact, the orders they made in October last year have only just arrived, after seven months, and the orders haven’t been fully met yet.
Mr Neo elaborated that the demand for used cars is also driven by high COE prices, more business in the delivery sector as the economy reopens, and the fear of rising interest rates on loans.
In order to avoid the possibility of high interest rates and more expensive COEs, which would mean spending more, people are opting to buy their cars now.
The delays are causing premium car dealerships to suffer in other ways too, as they cancelled their orders out of impatience because their deliveries were repeatedly delayed.
Hence, the demand for used cars is expected to become stronger over the next few months.
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Featured Image: Shutterstock / Phuong D. Nguyen
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