New market study, "Singapore Autos Report Q4 2013", has been published

When the Monetary Authority of Singapore (MAS) introduced tough new restrictions on car loans in February, BMI said that Certificate of Entitlement (COE) prices would dip in the short-term but stay historically elevated (see 'Middle-Class To Bear Brunt Of Loan Curbs', February 27). True enough, although COE prices initially dipped, they have since rebounded and are now back above SGD70,000 (US $55,000) for both Category A (1600cc and below) and Category B (above 1600cc) cars.

Possible Reasons For The Recent Loan Curbs

While consumers have clamoured for restrictions on car loans in the past few years to cool the overheated COE market, we see the introduction of the new curbs by the MAS as more of a policy to encourage financial prudence among buyers and lenders than as a tool to target COE prices directly. As COE prices have gone through the roof in the past few years, it does not make good financial sense to take out a 100% loan on a new car whose value is going to depreciate at an accelerated pace in the first few years.

Full Report Details at
- http://www.fastmr.com/prod/689075_singapore_autos_report_q4_2013.aspx?afid=301

Narrow COE Differential Will Bolster Premium Car Sales

In our opinion, the small difference in prices for the two car categories will be one of the supporting factors helping luxury car brands to finish 2013 as best-sellers, similar to the trend observed in 2012. While premium cars do end up costing more when the total purchase price of the car, together with its higher ARF is taken into account, the narrow price differential between the two COE categories reduces the opportunity cost of owning a premium car, making the decision of owning a higher-end car easier for upper-middle class and wealthy households.

Motorbike Sales Enjoy A Resurgence

Motorbike sales have enjoyed a resurgence at the expense of declining car sales. BMI is bullish on 2013 motorbike sales growth and we have upgraded our forecast with 7M13 sales coming in strongly at 6,791 units. We now forecast sales to grow 11.0%, to 11,000 units, versus 8.0% previously. While small car COE prices have soared from 2010-2012 and hit almost SGD80,000 (US$62,900), motorbike COE prices are still at an affordable SGD$1,800 (US$1,400).

Sales Forecast

With sales of passenger cars (includes taxis) for the first seven months of 2013 reaching 15,014 units, we have downgraded our 2013 sales growth forecast to -15.0%, to around 26,000 units.

Over the 2013-2017 period, we forecast passenger car sales growth rates to remain lacklustre for the next two years before picking up in 2015 as a slew of COEs get de-registered, which will free-up additional supply in the market.

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