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Article: What Singapore's Luxury Car Market Reveals About Income Inequality

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2nd Gear (edited)

At https://www.valuechampion.sg/what-singapores-luxury-car-market-reveals-about-income-inequality

Quote

 

As COVID-19 wreaks havoc throughout the global economy, it's difficult to imagine any country out of the pandemic without a sizable portion of their population affected financially. In Singapore, bankruptcy has reached an all-time high in March 2020, thousands of people have been furloughed and a recession is looming on the horizon. To add on to the financial grievances that occurred due to COVID-19, Singaporeans also have to contend with a high cost of living, ranging from high real estate and car prices to the increasing cost of common household items. Take cars, for instance. Whereas a 2019 Toyota Corolla typically costs between $17,000-$21,000 (S$23,500-S$29,000) in the US, the same car will cost around 3.5 times as much in Singapore due to additional fees and taxes. Thus, cars have become a status symbol of the wealthy and an aspirational purchase for many Singaporeans. However, looking at Singapore's car industry during the COVID-19 pandemic and the years before, we have found evidence suggesting that wealth inequality may be widening during this pandemic.

Study Highlights

Despite cancelled COE bidding and closure of showrooms, 40% of new car registrations were luxury cars (including Aston Martins, Porsche and Bentleys) in April and May 2020 compared to the 19-25% they represented in previous years

Certain luxury brands like Rolls Royce may even see increases of sales this year due to a fairly unaffected ultra-luxury car market

Changes in COE prices disproportionately affect the middle class's ability to buy a car—in 2013, when COE prices were at their highest, luxury car registrations dropped 14%, while non-luxury car registrations dropped 24%

luxurycarsaspercentoftotalcarregistratio

 

 

Edited by dudez7
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Turbocharged (edited)

Well, this is one step closer to the carlite vision.

its strange to see cars used as an indicator.

Singapore's household income inequality falls to 18-year low

 

 

HOUSEHOLD income inequality in Singapore has fallen to its lowest level in almost two decades, according to figures released by the Singapore Department of Statistics (SingStat) on Thursday.

The Gini coefficient, based on household income from work per household member, was 0.452 last year, lower than the 0.458 in 2018 and its lowest since 2001.

The Gini coefficient measures income inequality from zero to one, with zero being most equal.

Edited by Sdf4786k
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1st Gear

Spotted many cecas driving the macan which might explains the 64% increase🤣

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Hypersonic

I am not an economist, but let me offer my 'kopitiam uncle' interpretation of car sales in Singapore.

Period when COE premium reaches record high (2012 - 2013)

Percentage of COE premium to the total car cost is the reasons behind the dropped in non-luxury car sales. Using the Toyota Altis (OMV ~$20K) as an example, basic car cost, after applying various taxes but excluding COE, is ~$46K. An increase of COE premium from say $46K to $92K (during the said period) represent a 50% - 60% increase in car price. How many buyer of bread and butter model can stomach such as huge increase?

On the other end of the spectrum, basic car cost of a Mercedes-Benz S300L (OMV ~$85K), after applying various taxes but excluding COE, is ~$228K. An increase of COE premium from say $65K to $97K (during the said period) represent "just" a 10% - 15% increase in car price. In relative term, the smaller % increase will be much easier for its buyer to absorb.

Increase in luxury car sales during CB

2 key factors here. First, for those billionaire (and higher end millionaire), car is not really considered a big ticket item, so CB or not, their purchase plan is less likely to be affected. With halting of sales during CB period, even with the same number of RR, Bentley, Porsche being put on the road as any other time, their % would have increase, since there are no COE to register most bread and butter model, and that brought me to the 2nd point.

Many dealer would keep a handful of open cat COE for those who need to have their car registered asap (mostly at a premium). Being a commodity, selling them to luxury car owner would be relatively easier than to non-luxury car buyer, so more luxury car and less non-luxury were put on the road during CB period (don't forget that the number of open cat COE is the same, just that used by different buyer). So it is simple mathematics here and not any rocket science.

Using car sales as an indicator of income inequality

Quite rubbish if you want my personal opinion. There are poor who insisted on having a car (and registering them under PHV scheme is just one of them), while there are also millionaire who choose to take public transport (Grab and taxi inclusive), and not to mention the choice of luxury vs non-luxury model is again a personal preference (I know Dyson CEO drove a Audi A4 1.4T, while founder of Ikea drove a Volvo 240GLE for 20 years, etc.)

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Turbocharged (edited)

In 1 Word..describe these S'porean are ''HowLian''....You buy,I buy...

Edited by ER-3682
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Supersonic
2 hours ago, Carbon82 said:

I am not an economist, but let me offer my 'kopitiam uncle' interpretation of car sales in Singapore

Using car sales as an indicator of income inequality

Quite rubbish if you want my personal opinion. There are poor who insisted on having a car (and registering them under PHV scheme is just one of them), while there are also millionaire who choose to take public transport (Grab and taxi inclusive), and not to mention the choice of luxury vs non-luxury model is again a personal preference (I know Dyson CEO drove a Audi A4 1.4T, while founder of Ikea drove a Volvo 240GLE for 20 years, etc.)

Just look at branded goods can liao

Many youngsters on starting salaries will happily splurge a months salary on a branded handbag whereas those who already have money will try and conserve it for value buys

 

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Turbocharged
59 minutes ago, Soya said:

Just look at branded goods can liao

Many youngsters on starting salaries will happily splurge a months salary on a branded handbag whereas those who already have money will try and conserve it for value buys

 

Look at the sales of audi a3 1.0 and bmw 1 series can liao.

 

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Supersonic

I guess banks will have the last laugh. Song song gao Jurong.

Earning car loan interest rates is ever increasing.

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Supersonic
23 minutes ago, Watwheels said:

I guess banks will have the last laugh. Song song gao Jurong.

Earning car loan interest rates is ever increasing.

And take max loan + overtrade

2yrs later itchy backside see fren/neighbour/colleague upgrade, monkey see monkey do. Do early settlement and kena Rule 78 penalty on the hefty outstanding loan. To make up the shortfall in cash, go for max loan + overtrade again.

And then 2yrs later........tink u know where this is going

 

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1st Gear
1 hour ago, Soya said:

And take max loan + overtrade

2yrs later itchy backside see fren/neighbour/colleague upgrade, monkey see monkey do. Do early settlement and kena Rule 78 penalty on the hefty outstanding loan. To make up the shortfall in cash, go for max loan + overtrade again.

And then 2yrs later........tink u know where this is going

 

can take max loan meh? tot min 40% 

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Turbocharged (edited)
1 hour ago, Ginyu said:

can take max loan meh? tot min 40% 

It’s a slippery slope when u deal with used cars dealers who bump up the prices. Just waiting for MAS to flex the muscles.. 

Edited by Sdf4786k

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Twincharged
4 hours ago, Watwheels said:

I guess banks will have the last laugh. Song song gao Jurong.

Earning car loan interest rates is ever increasing.

Need to take loan for daily transport should not buy car at all.

My view.

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Turbocharged
5 hours ago, Watwheels said:

I guess banks will have the last laugh. Song song gao Jurong.

Earning car loan interest rates is ever increasing.

Alot also default in Payment...waiting for Banks to Tow back their Cars.

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Twincharged (edited)

Basically we just have to wait, the next bumper crop COE cycle will be in about  8 years time,  we will see a drastic increase in sales of non luxury cars by then, which will indicate a improve in income  equality basing on his theory.

Edited by Ct3833

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Supersonic (edited)

So my chats with those in the know were right. The big ticket cars were moving the most during cb. Many hidden dragons around.

The cars that moved are not entry level also. 

Edited by Mockngbrd
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1st Gear
12 hours ago, ER-3682 said:

Alot also default in Payment...waiting for Banks to Tow back their Cars.

Very lao kui when your friends or neighbours see your car kana tow away🤣

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Turbocharged
13 hours ago, ER-3682 said:

Alot also default in Payment...waiting for Banks to Tow back their Cars.

More likely finance company seize and auction 

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