By the CarBuyer Team

Ang Ghim Cheong
Managing Director,
Vehicle Operations, Group Exklusiv
Brand: Renault, Skoda
We think Motorists are holding onto their cars longer because scrap rebates are getting lower. How do you see that affecting the way you do business?
Not very true. Cars bought in 2002 are being scrapped right now because the COE then was about $30,000 whereas now it’s about $18,000. So I think the entry-level marques or the affordably-priced models will continue to do well.

As for us, we probably won’t see much change. It should be business as usual. As long as COEs continue to be at this level or plunge, people will continue to scrap their cars.

The strength of the Euro has affected some local distributors. How will this continue to affect local players in general this year, and how do you plan on mitigating / taking advantage of the effects?
We’ve seen some brands assume the distributorship like Daimler-Chrysler, BMW and Volkswagen. They can bring the OMV down and therefore make the cars less costly.

Lowering the spec of our cars is not likely to work. The Singapore car market has been about highly-specced cars from Day One. Also, for most European cars, many of the standard features are hard to omit, it’ll be costlier to remove them.

Lastly, how do you see the COE quota panning out this year?
I think it will stay at around 90,000 and that there will be a lot of cars under five years old that will be scrapped.

Olaf Dübel
Director,
Volkswagen Singapore
Brand: Volkswagen
We think Motorists are holding onto their cars longer because scrap rebates are getting lower. How do you see that affecting the way you do business?
In this respect, Singapore is a very unique market, where you have cars of three to four years in age on average. If you look to Europe, we have an average age of five to seven years and many are even older.

Our Group market share in Europe is 17% and that includes cars of varying ages. With respect to your question, our main priority initially will be to increase local market share.

The strength of the Euro has affected some local distributors. How will this continue to affect local players in general this year, and how do you plan on mitigating / taking advantage of the effects?
The euro was strong last year too but we managed to keep prices relatively stable.

As far as prices go we do try to adjust for local market conditions, and in any case nobody knows where the Euro will be in one or two year’s time.

Lastly, how do you see the COE quota panning out this year?
Well, all indications are that the supply will remain more or less the same.

A C Neo
Marketing Director,
Tan Chong Motor Sales
Brand: Nissan
We think Motorists are holding onto their cars longer because scrap rebates are getting lower. How do you see that affecting the way you do business?
The ownership in the past was much longer. Now it’s much shorter: cars two, three years old are being scrapped. In the past it was five years, six years. In my opinion, the Government knows what is happening, and they will have a policy to address this issue.

We will adapt ourselves to Government policy change. In this market it’s important that you follow what the market wants.

The strength of the Euro has affected some local distributors. How will this continue to affect local players in general this year, and how do you plan on mitigating / taking advantage of the effects?
The Euro has gained, but the Japanese Yen has also gone up, so the difference is not very big. Of course, there’s an advantage with the Yen at the moment.

The Yen is sometimes up, sometimes down and so we have to adjust. There are no price controls in the Singapore market; we are not controlled by Japan or the Government. If a car comes in expensive, we sell expensive, and if it’s cheap we sell cheap.

Lastly, how do you see the COE quota panning out this year?
It’s a question that is easy to get wrong! But there seems to be a reasonable volume for the market. Of course, we cannot compare it with the record year.

It’s anybody’s guess, but my guess is it will be slightly lower, but still a respectable figure. Maybe it’s good to balance it out this year so the COE will not jump up and down too much.

Ron Song
Managing Director,
Premium Automobiles
Brand: Audi
We think Motorists are holding onto their cars longer because scrap rebates are getting lower. How do you see that affecting the way you do business?
Loans are a bit longer these days, therefore customers have less equity in their cars and some might be in a negative equity situation. I see dealers’ margins getting less and less, and you have to think of ways of making it more attractive for buyers.

But whether or not people can afford a car depends on their salary bracket. When it comes to premium brands, customers are less affected by negative equity.

The strength of the Euro has affected some local distributors. How will this continue to affect local players in general this year, and how do you plan on mitigating / taking advantage of the effects?
The Euro has stabilised a bit now. There was one stage last year when it was a bit frightening.

Importers can also hedge against the Euro. Sometimes we take a risk. If we feel it’s coming down we don’t have to hedge, but if we feel it’s going up we hedge at bit, and that allows us to know exactly what we can or cannot do.

Lastly, how do you see the COE quota panning out this year?
I’m not sure. This is something that everybody is only guessing.

I don’t like to guess, so I’ll wait and see.

Teo Hock Seng
Managing Director,
Komoco Motors
Brand: Hyundai, Chrysler, Jeep
We think Motorists are holding onto their cars longer because scrap rebates are getting lower. How do you see that affecting the way you do business?
I don’t think we’ve yet to see the real effect of the lower scrap rebates given their relatively recent introduction. I’m guessing that we’re still going through a gestation period.

We do get a lot of new buyers and these also tend to be the more serious buyers. As a stabiliser, it helps that we also try very hard to keep prices pegged to market conditions. We try to hold them steady irrespective of what our competitors do.

The strength of the Euro has affected some local distributors. How will this continue to affect local players in general this year, and how do you plan on mitigating / taking advantage of the effects?
European cars have been handicapped by the high price of the euro but we’re lucky because our cars are all priced in US dollars.

The US dollar now, is far more conducive for us in terms of pricing competitiveness and we use that to our advantage as much as possible. In 1996 when the exchange rate shot up we sold 670 cars the whole year, now we’re trying to move that number in two weeks.

Lastly, how do you see the COE quota panning out this year?
That’s pretty hard to guesstimate but according to the figures we get from the Motor Traders Association, the figure should be about 109,000. That’s going by the number of cars deregistered last year.

Having said that it’s also very clear that the market has been slowing down, all things considered. We can bid lower but still get our COEs so an increase in quota might just help keep prices low.