Market Report, "Singapore Autos Report Q2 2015", published

After outperforming in the Singapore auto market in 2014, we expect volume brands to continue enjoying strong demand in 2015 on the back of a rising number of COEs, as well as a weak Japanese yen.

We previously highlighted in late 2013 that the proposed revision to the country's COE system would help mass market brands claw back market share from their premium segment counterparts, which had been outperforming before 2014 ( see 'New COE Regulation Could Reverse Sales Trends', September 17 2013). True enough, when the Land Transport Authority (LTA) introduced the additional horsepower criterion for Category A vehicles, most luxury brands were pushed out of it, which helped increase demand for volume brands in the segment.

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This revision coincided with a rising quota of COEs in 2014 as an increasing number of cars were de-registered. Significantly, Toyota Motor regained the mantle of the top selling brand in 2014, a position it had held before 2011. We expect these dynamics to remain in play over the course of 2015, as the quota of COEs continues to expand due the rising number of cars nearing their 10-year validity period, which will in turn keep demand for volume brands strong.

In October 2014, the LTA announced that it will cut the vehicle sales growth rate from 0.5% to 0.25% from February 2015 to January 2018. In addition to that, the authorities will also reduce the allocation of COEs to Category E. As shown in the table below, COEs issued are grouped into five categories, with the open category (Category E) being COEs that can be used for any vehicle type. Right now, 15.0% of COEs from deregistered vehicles in each of the other vehicle categories form the COE quota for the Open Category, and this will be cut to 10.0% from February 2015.

While these policy changes will squeeze the overall supply of COEs, they will be balanced out by the rising number of vehicle de-registrations we expect in the next few years. In fact, the LTA recently announced an increase in...

The Singapore Autos Report features the latest data and forecasts covering production, sales, imports and exports.

BMI Research's Singapore Autos Report provides industry professionals and strategists, corporate analysts, auto associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the automotives market in Singapore.

Key Benefits

* Benchmark BMI's independent automotives industry forecasts on Singapore to test other views - a key input for successful budgetary and planning in the Singaporean automotives market.
* Target business opportunities and risks in the Singaporean automotives sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Singapore.

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