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ST Forum Jul 15, 2011 Price hike ripple effect: A personal experience IN HIS letter on Wednesday, Mr Edward Teo said that when a basic necessity such as public transport attracts a fare hike, there will soon be a chain effect of other increases ("Worry over fare hike ripple"). I find this to be true. For instance, the last time I complained and asked my neighbourhood hawker why she increased her food prices, she pointed to the rise in train fares. Once hawkers increase their prices, they will not reduce them, even when their costs go down. This is not the right time for public transport companies to chalk up higher profits, especially when we are still struggling with high inflation. Joan Chng (Madam)

Good to see who esle will be affected with the CM1 for cars. Grooming and paintworks mentioned so far SINGAPORE: Motor firms Channel NewsAsia spoke with said recent loan curbs on car purchases are having negative ripple effects on some vehicle-related services. They said this effect is likely to be more pronounced, with a temporary reprieve on borrowing limits for used car dealers ending on Tuesday. On Wednesday, the loan curbs set by authorities in February will return in full force. Used car dealers cleared much of their old stock in the 60-day reprieve period given by authorities, where people could take up to 100-per cent loans for car purchases. It applied to some 7,000 second-hand vehicles, with over 4,800 sold. Car dealers have been saying second-hand luxury vehicles are difficult to sell, even if buyers can take up full loans to buy them. Such cars simply do not suit the needs of the many budget-conscious people looking for cheaper, second-hand buys. With the reprieve period over, the maximum borrowing limit is 60 per cent of the purchase price. Dealers said the high down-payment needed to get a vehicle is causing the new supply of used cars for sale to shrink. Owners are likely to hold on to their old rides since conditions for getting a new one are tough. Mike Wee, owner of Mayfair Motoring, said: "People will maintain their car, drive their car until almost the end, until the car really needs to (be scrapped). Then probably they will change to another car." Fewer used cars for sale also means less need for some vehicle-related services. Kenson Goh, sales executive at Car Design, said: "The spray-painting and the car-grooming sector will be affected. Because basically we can't move our old stock, we aren't able to bring in new stock. So therefore we're unable to send over new stock over to the spray-painting or car-grooming companies." Empty shop spaces at the Automobile Megamart in eastern Singapore showed how firms have downsized operations. Motorviva sells commercial vehicles, which are not hit by loan curbs. It has taken over a prime spot at Automobile Megamart, vacated by a used car dealer. Joe Quah, assistant sales manager at Motorviva, said: "The car loan curb - I think all of us know that it has hit the market quite badly. So I think that gives us opportunities to find this very good location which we have always wanted." With business slowing, car dealers said rental rates at Automobile Megamart have fallen about 40 per cent. - CNA/xq