VES 2018

[Ripclaw]

i won't be surprised coe crash on Jan 1st bidding

 

Seriously? Thats the point at which bidding needs to take place in order to secure a car for CNY. Why would it crash?

[Fuelsaver]

Zero growth w new ves.. Who knows what beholds next year..

[Ripclaw]

Logically speaking, if I were a used car dealer, an arbitrage opportunity is to target relatively new (1-2 yr) used cars which are most affected by the VES i.e. Audi A4 1.4L (increase by SGD30k just on VES impact), Forester XT (list price of low SGD120s in 2017 to SGD153k in 2018), Sorento diesel (list price of low SGD140s to SGD165k excluding SGD20k VES), and other popular small capacity turbo and/or diesel cars. 

 

It's a one-time regulatory driven arbitrage opportunity. 

 

Downside is that its quite a capital intensive trade, so if you're wrong on your demand read, it could get expensive quickly.

Not really true. Car owners are not stupid as well. They will know if their ride is severely impacted by VES and price their car accordingly if they're looking to sell. That's also assuming that they are looking to sell after 1-2 years. Logically, they would rather hold on to their car right? Given that if they buy back the same model, it's gonna cost more.

 

Also, a used car dealer would be severely limiting his/her market by taking in these cars. You're banking on buyers looking for a specific model/trim of a car and looking to buy second hand. Most buyers would just opt for another brand/model thats not so heavily impacted by VES instead of either buying a new say, A4 or a used A4. Maybe they just buy a 2 series or something, or whatever the equivalent is (thats not as heavily impacted).

 

just my 2c

[Ct3833]

Currently live beside a heavily used road. Reduction of pollution using whatever means (CO2, NOx etc) are all welcomed.

 

Some cars also relatively unchanged. Wish is one example. Any price movements will be attributed almost directly to COE movements.

so when the new surcharge takes effect, some models may be more badly impacted by the new surcharge which resulting in slightly lower COE(hopefully the case), that is the good time to buy cars like wish which is cheaper than now because it is not affected by surcharge. 

[Sdf4786k]

I can't deny Singapore car market had distorted by gov taxes, coe quota. If you can buy a Brand new Kia Niro at other country for $29k(included cost, margin + service), you will be surprise how profitable our AD make and why PI chasing for the market.

 

Check the basic car cost before you make any decision, this is the only way for them to keep their price reasonable and save our hard earn money!

 

https://www.onemotoring.com.sg/content/onemotoring/en/lta_information_guidelines/buy_a_new_vehicle/car_cost/_jcr_content/main_par/download/file.res/Car_Cost_Update.pdf

 

Profit is just one part of the equation

 

Operating the dealership is the other part , like infra and servicing.

 

All the hoist and manpower.

 

from the market perspective,  If the owner comes in, change oil and filter and plugs, the profit will be solid.

 

But, if the owner comes back with issue, thats is unable to be identified, thats where the burden starts.

 

Even with the cost of the warranty borne by the mfg.

 

Its the labour cost and the repeated repair that cannot be charge back. 

[merc280v6]

so when the new surcharge takes effect, some models may be more badly impacted by the new surcharge which resulting in slightly lower COE(hopefully the case), that is the good time to buy cars like wish which is cheaper than now because it is not affected by surcharge.

No. Free market dynamics don't work that way lah!

[Soya]

No need to overthink it. U can be sure whichever scholar that ran the numbers thru b4 getting the nod from some big shot at LTA will show overall revenue collected from VES will be higher

[Voodooman]

No. Free market dynamics don't work that way lah!

[Sunny]

Maybe we'll hear another famous statement soon....? LOL

 

 

actually he was trying to say

 

COE wont drop

 

 

 

LLST

[merc280v6]

Holding all factors constant, I think Cat A may drop to partially compensate for lower VES rebates, Cat B is less price sensitive, so unlikely to move much. Problem is there isn't many models that will enjoy $20-30k rebates after new regime kicks in, versus now. Long term, it may shift demand to newer plug in models, as per your thinking.

 

Thoughts?

You're probably right about Cat A being more price-inelastic than Cats B, or E.

 

But even if there were to be a dip in Cat A COE price, it would likely be momentary at best, and unsustainable, since marginal demand shifts will be propped from below (pent-up, non-car-owning households, first time buyers / new grads ... all waiting for that opportunistic window), and from sideways (households looking to add their 2nd or 3rd small car, for marketing, or for their children's use).

 

It all distills down to the fact that demand for cars in SG is basically insatiable!

 

Not forgetting that the ADs are also in the overall fray of things, as they start (or have already started) to bring in previously-phased-out MPI-engined entry models - just to meet lower NOx emissions and thus, enjoy higher VES rebates, and introducing a gamut of new hybrid models ... all these, to divert fresh demand toward their "VES-compliant" cars.

 

Depending on what models their principals (manufacturer) are able to offer, there will likely be a battlefield among ADs to capture market share in 2018. The poor diesel models will probably be phased out of showrooms before the get go!

 

You will note that the strongest French diesel advocate here (Renault) has decimated nearly all their diesel models ... and even the Germans, like Audi, more so than Mercedes Benz. Only BMW continues to carry a fair range of diesel models, for whatever reason, but not for long.

 

So what comes next, after hybrids?

 

The e-cars ... but until the infrastructure is built to support these here, and LTA revising the taxation system (from power station to plug - now, Singapore Gencos have all been re-powered to CCGTs firing cleaner PNG anyway ... compared to the exhaust tips of diesel, or even gasoline engines proliferating our roads), we still have a long way to go in saving Gaia!

 

Oil companies are fully aware of the inevitable future, re declining retail sales of automotive fuel. Why do you think Shell is looking at divesting their retail stations here, to Sinopec?

 

They won't go bust though. Just need to channel distillate production to lubes and chemicals!

Edited November 13, 2017 by merc280v6

[Ahbengdriver]

Zero growth w new ves.. Who knows what beholds next year..

govt planning for GST up to 10%.

 

Then MCF can organize a gathering at padang, all stand facing the parliament house, sing..

 

Mai Kee Lah, Singapura

 

Mai kee Lah, Gee A$$ Tee

[Voodooman]

You're probably right about Cat A being more price-inelastic than Cats B, or E.

 

But even if there were to be a dip in Cat A COE price, it would likely be momentary at best, and unsustainable, since marginal demand shifts will be propped from below (pent-up, non-car-owning households, first time buyers / new grads ... all waiting for that opportunistic window), and from sideways (households looking to add their 2nd or 3rd small car, for marketing, or for their children's use).

 

It all distills down to the fact that demand for cars in SG is basically insatiable!

 

Not forgetting that the ADs are also in the overall fray of things, as they start (or have already started) to bring in previously-phased-out MPI-engined entry models - just to meet lower NOx emissions and thus, enjoy higher VES rebates, and introducing a gamut of new hybrid models ... all these, to divert fresh demand toward their "VES-compliant" cars.

 

Depending on what models their principals (manufacturer) are able to offer, there will likely be a battlefield among ADs to capture market share in 2018. The poor diesel models will probably be phased out of showrooms before the get go!

 

You will note that the strongest French diesel advocate here (Renault) has decimated nearly all their diesel models ... and even the Germans, like Audi, more so than Mercedes Benz. Only BMW continues to carry a fair range of diesel models, for whatever reason, but not for long.

 

So what comes next, after hybrids?

 

The e-cars ... but until the infrastructure is built to support these here, and LTA revising the taxation system (from power station to plug - now, Singapore Gencos have all been re-powered to CCGTs firing cleaner PNG anyway ... compared to the exhaust tips of diesel, or even gasoline engines proliferating our roads), we still have a long way to go in saving Gaia!

 

Oil companies are fully aware of the inevitable future, re declining retail sales of automotive fuel. Why do you think Shell is looking at divesting their retail stations here, to Sinopec?

 

They won't go bust though. Just need to channel distillate production to lubes and chemicals! ðð¼

Thanks for sharing. Good point.

 

At current level, many households i know are already thinking of buying a second or third car, so there is a baseline definitely but I expect Cat A to drop first half of 2018 due to lower rebates and as many bought forward their purchases to 2017, hope I am right.

[Showster]

2017 to 2018 was a record high of new cars. Supposing 50% of buyers and dealers renew COE, there will only be 50% of COE back to market. More will turn to secondhand market as COE spikes and cause even more renewal of COEs.

 

I wish I am dreaming only, but do see it headed that way...

[Kia7200]

And for serious car buyers, next yr is the last yr for the high coe quota liao.

 

So u wait some more, be prepare for a 70k coe liao

[Voodooman]

2017 to 2018 was a record high of new cars. Supposing 50% of buyers and dealers renew COE, there will only be 50% of COE back to market. More will turn to secondhand market as COE spikes and cause even more renewal of COEs.

 

I wish I am dreaming only, but do see it headed that way...

Long term is definitely up. $200k COE is not inconceivable. Fixed supply and rising demand, ceteris paribus, there can be only 1 direction. But supply will peak this year or next (based on age profile of SG vehicle population), so don't see prices rising too fast as well.

 

Don't think 50% will renew COE lah.

[Enye]

You're probably right about Cat A being more price-inelastic than Cats B, or E.

 

But even if there were to be a dip in Cat A COE price, it would likely be momentary at best, and unsustainable, since marginal demand shifts will be propped from below (pent-up, non-car-owning households, first time buyers / new grads ... all waiting for that opportunistic window), and from sideways (households looking to add their 2nd or 3rd small car, for marketing, or for their children's use).

 

It all distills down to the fact that demand for cars in SG is basically insatiable!

 

Not forgetting that the ADs are also in the overall fray of things, as they start (or have already started) to bring in previously-phased-out MPI-engined entry models - just to meet lower NOx emissions and thus, enjoy higher VES rebates, and introducing a gamut of new hybrid models ... all these, to divert fresh demand toward their "VES-compliant" cars.

 

Depending on what models their principals (manufacturer) are able to offer, there will likely be a battlefield among ADs to capture market share in 2018. The poor diesel models will probably be phased out of showrooms before the get go!

 

You will note that the strongest French diesel advocate here (Renault) has decimated nearly all their diesel models ... and even the Germans, like Audi, more so than Mercedes Benz. Only BMW continues to carry a fair range of diesel models, for whatever reason, but not for long.

 

So what comes next, after hybrids?

 

The e-cars ... but until the infrastructure is built to support these here, and LTA revising the taxation system (from power station to plug - now, Singapore Gencos have all been re-powered to CCGTs firing cleaner PNG anyway ... compared to the exhaust tips of diesel, or even gasoline engines proliferating our roads), we still have a long way to go in saving Gaia!

 

Oil companies are fully aware of the inevitable future, re declining retail sales of automotive fuel. Why do you think Shell is looking at divesting their retail stations here, to Sinopec?

 

They won't go bust though. Just need to channel distillate production to lubes and chemicals! ðð¼

you are kidding about channeling all that distillate production to lubes and chemicals right?

 

are you?

 

 

[merc280v6]

Like most viral infections, the COE renewal phenomenon will be self-limiting.

 

As PQP rises with increasing COE price, less and less budget-challenged owners would continue to see the impetus of renewing their 10-yr old car's COE.

 

Imagine PQP approaching $100K, rising to $150K ... or even $$200K!

[fungyee77]

Not really true. Car owners are not stupid as well. They will know if their ride is severely impacted by VES and price their car accordingly if they're looking to sell. That's also assuming that they are looking to sell after 1-2 years. Logically, they would rather hold on to their car right? Given that if they buy back the same model, it's gonna cost more.

 

Also, a used car dealer would be severely limiting his/her market by taking in these cars. You're banking on buyers looking for a specific model/trim of a car and looking to buy second hand. Most buyers would just opt for another brand/model thats not so heavily impacted by VES instead of either buying a new say, A4 or a used A4. Maybe they just buy a 2 series or something, or whatever the equivalent is (thats not as heavily impacted).

 

just my 2c

 

You have a point, but the fallacy is the assumption that owners are akin to car traders that try to make the rational trade.

 

Most sellers of a 1-2 year old car are not looking to maximize the value of the car. Most likely, they have decided to buy another car either for family reasons (upsizing) or personal reasons (fun etc), and are looking to sell their existing ride at a value that's above the trade-in value offered by the AD. 

 

If I were a used car dealer, I would have my eyes particularly on the VES-impacted cars in such cases. 

 

But you are right in that demand dynamics for some cars may shift pursuant to the VES, but I would venture to say that demand for cars like the new A4 would probably still be strong (comp set cars like C-class, 3 series are priced similarly even after the VES impact). So if I can get a 1-yr old A4 for say SGD120-125k (some owners had bought at SGD140k and below), and the new A4 is going for SGD180-190k in 2018, that's a heck of an arbitrage.