Luxe-car numbers grew as others shrank in Singapore.
IF you have been seeing more premium and luxury car brands on the road, it is because there are in fact more of such cars. Some 27 months after the Land Transport Authority introduced a 130bhp power cap to the Category A COE in an attempt to re-introduce equity into that mainstream segment, Torque decided to look at the car population statistics to see how the profile has changed. The findings reveal that the premium brands continued to power ahead (see chart on facing page).
Practically all of them posted a growth in their population, in a year (2015) when the overall car population shrank. In fact, each of them has hit a record high. Only a few upmarket brands did not grow, such as Lamborghini, Aston Martin and Lotus. On the other side of the coin, almost all the bread-and-butter brands suff ered a shrinkage, with notable exceptions such as Honda (thanks to the popularity of the parallel-imported Vezel), Mazda (due to a strong product lineup plus the fervour of the Eurokars Group) and Subaru.
The casual observer might conclude that this is merely the eff ect of growing affl uence. In a country with the highest percentage of millionaires in the world, Singapore is expected to display signs of wealth, whether it is on the road or elsewhere. While that observation is not incorrect, there is a multiplier eff ect at play here. And that multiplier eff ect lies within the COE system. Over the last five years or so, COE premiums have been at fairly lofty levels, almost reaching $100,000 three years ago.
In a high-COE environment, premium and luxury brands always outperform the market. This is simply because the wealthy are able to outbid others. Also, with high premiums, consumers tend to shun budget products because the price of the COE often becomes much higher than the price of the car itself. That is why car dealers in Singapore do not even bother to bring in models that do not “make sense” in such a situation.
The Kia Carens and Renault Clio were two such examples, even though they had each undergone a full model change in the period. And budget brands from Malaysia and China fizzled almost to nothingness in Singapore, with Chery being about the only one that has managed to weather the storm. The COE system has also been favouring bigger cars, largely because of the Open category. Devised as a category that will accommodate overheated demand in any of the other groupings, Open has from day one in 1990 been used almost exclusively for bigger cars. Again, this is because bigcar buyers are able to outbid all others for a certificate.
And this is why cars with engines above 1600cc now make up 46.5 percent of Singapore’s car population, up from 38.9 percent in 2005 and 28 in 1997. If nothing is done to refine the system, bigger cars will become the dominant cohort here by 2020. As for premium brands, the future looks brighter than ever, thanks to the Government’s “car-lite” ambition. Today, the annual allowable growth in car population is 0.25 percent, which is not even enough to translate to actual growth. In fact, the car population has shrunk to its lowest in six years.
If the Government lowers the growth cap to zero (as it has said it would), it is quite conceivable for the population shrinkage to accelerate. And if that is not arrested, we could soon end up in a situation where only the very wealthy are able to own cars. It is something the late transport and behavioural economist, Anthony Chin, predicted. In 1994, when the quota system was just four years old, he said that, in time, only top earners in Singapore would be able to aff ord cars. The Government dismissed his assertion, and in the two decades since, it would seem that the good professor (who died two years ago at the age of 57 after a short illness) got it wrong.
But now, it seems clear that we are heading towards this outcome, what with the looming likelihood of our human population hitting 6.9 million. Which means children who are now in their teen or preteen years must get used to the idea that car ownership will be unattainable to most of them. They will have to get accustomed to the idea of taking public transport. Aspiring to own a car may well be dreaming the impossible dream. For most, at least.
