2015 Jun, 2nd COE Bidding Exercise

[Limwsv]

 

yeap, since last bidding, the prices for Wish/Camry/Vios hv dropped 2 times.

the coming few biddings will b interesting...

 

Actually I prefer to use the less popular brands as a marker. So far, VW has been very drop resistance, very good marker if they start cutting price.

 

Japanese brands too aggressive trying to capture market share to be a good signal of the next round of bidding.

[Tigershark1976]

Yup, indeed, it will be very interesting to see how the car dealers will respond. With more COE quota, the dealers is enjoying bigger pie. Take Altis for example, the margin is over 20K per unit as of Jun 2015.

 

link: http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/car_cost.MainPar.30963.File.tmp/Car_Cost_Update.pdf

 

But during 2006 where COE is at its peak, the margin for such Japanese car is average around 10K. This is because the dealers can sell more cars and cover its overheads by volume.

 

Expect to see dealers starting to reduce the margin when the COE quota hit 4K per month.

 

[Wt_know]

the $10k profit margin you mentioned ... COE quota was 10k per month, 120k-125k per annum

now it is still > 50% drop of coe quota compare to good old days ... hehe

 

Yup, indeed, it will be very interesting to see how the car dealers will respond. With more COE quota, the dealers is enjoying bigger pie. Take Altis for example, the margin is over 20K per unit as of Jun 2015.

 

link: http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/car_cost.MainPar.30963.File.tmp/Car_Cost_Update.pdf

 

But during 2006 where COE is at its peak, the margin for such Japanese car is average around 10K. This is because the dealers can sell more cars and cover its overheads by volume.

 

Expect to see dealers starting to reduce the margin when the COE quota hit 4K per month.

 

 

Edited July 1, 2015 by Wt_know

[Enye]

Yup, indeed, it will be very interesting to see how the car dealers will respond. With more COE quota, the dealers is enjoying bigger pie. Take Altis for example, the margin is over 20K per unit as of Jun 2015.

 

link: http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/car_cost.MainPar.30963.File.tmp/Car_Cost_Update.pdf

 

But during 2006 where COE is at its peak, the margin for such Japanese car is average around 10K. This is because the dealers can sell more cars and cover its overheads by volume.

 

Expect to see dealers starting to reduce the margin when the COE quota hit 4K per month.

 

I wonder which AD would take such a short term view of the business

 

During the last peak Coe quota period, nobody expected a famine 5 years later. ADs were happily sacrificing margin for market share

 

I suspect now they would behave more like the oil cartels, maximising contributions. This means balancing share with margin.

 

While I believe the margins as well as Coe prices would fall due to current long supply, they will never go back to those glorious times again

 

😀

[Wt_know]

can hdb go back to $250k?

2004/2005 is already 10 years past

there is no point of return liao

the million$ dollar question is cost of living always rise faster than income for majority ...

 

While I believe the margins as well as Coe prices would fall due to current long supply, they will never go back to those glorious times again

😀

 

Edited July 2, 2015 by Wt_know

[Enye]

can hdb go back to $250k?

2004/2005 is already 10 years past

there is no point of return liao

the million$ dollar question is cost of living always rise faster than income for majority ...

 

 

 

hdb is possible because price is set by govt. but they probably won't do it unless over supply occurs again.

 

and if COE bidding is really free market without influence from the rumored invisible hand, then it is also possible if market conditions are right

 

[Limwsv]

can hdb go back to $250k?

2004/2005 is already 10 years past

there is no point of return liao

the million$ dollar question is cost of living always rise faster than income for majority ...

 

 

 

Actually, yes it can be possible. And in many other property markets elsewhere in the world, happens regularly as housing is part of a open market. Example a house in Las Vegas before the pre-fall days would go for 400K, now it's probably worth only 150K on the market.

 

In Singapore, less likely as housing exist in a controlled market. Govt cannot afford to allow HDB properties to go under the water (if you understand the term). There are significant political fallout if it happens. So Housing Development Board acts as a buffer in the market to control supply. Suck up supply and hold or requisition and demolish until low period is over.

Edited July 2, 2015 by Limwsv

[Lincoln]

I wonder which AD would take such a short term view of the business

 

During the last peak Coe quota period, nobody expected a famine 5 years later. ADs were happily sacrificing margin for market share

 

I suspect now they would behave more like the oil cartels, maximising contributions. This means balancing share with margin.

 

While I believe the margins as well as Coe prices would fall due to current long supply, they will never go back to those glorious times again

 

😀

 

Market Share is important. The lifetime value of a customer is not that one-time margin. If you do not capture enough market share, you lose the potential revenue of servicing/spare parts etc. So, yes AD is taking long term view and will most likely reduce margin to capture the market share.

[Limwsv]

 

Actually, yes it can be possible. And in many other property markets elsewhere in the world, happens regularly as housing is part of a open market. Example a house in Las Vegas before the pre-fall days would go for 400K, now it's probably worth only 150K on the market.

 

In Singapore, less likely as housing exist in a controlled market. Govt cannot afford to allow HDB properties to go under the water (if you understand the term). There are significant political fallout if it happens. So Housing Development Board acts as a buffer in the market to control supply. Suck up supply and hold or requisition and demolish until low period is over.

 

Actually, thinking back, it did happened before from 1999 - 2003 period. HDB was selling 20% below the price from 1999. I still remembered my new neighbours moving in 1 year after me who paid 80K less for a new unoccupied unit in my block.

Edited July 2, 2015 by Limwsv

[Enye]

 

Market Share is important. The lifetime value of a customer is not that one-time margin. If you do not capture enough market share, you lose the potential revenue of servicing/spare parts etc. So, yes AD is taking long term view and will most likely reduce margin to capture the market share.

 

you gotta be kidding me if you think that ADs push for market share so that they can earn more from servicing and spare parts

 

while we see certain ADs push for market share, the main agenda is never about servicing and spare parts

[Lincoln]

 

you gotta be kidding me if you think that ADs push for market share so that they can earn more from servicing and spare parts

 

while we see certain ADs push for market share, the main agenda is never about servicing and spare parts

 

of course they are. Unless, they are all making a big margin from that one time sale and subsidize you when you come back to do servicing?