Higher motorcycle COEs may cause some to downgrade, say dealers

Aircraft engineer Muhammad Syahrul with his year-old BMW S1000R motorcycle, which cost him $30,000.

Dealers are greeting the new tiered additional registration fee (ARF) for motorcycles with mixed reactions.

Targeted at curbing the rising number of expensive motorcycles, the new fee was announced by Finance Minister Heng Swee Keat in his Budget speech on Monday.

All motorcycles currently incur a flat ARF of 15 per cent of their open market value (OMV).

Under the new system, while the ARF for motorbikes with an OMV of up to $5000 will remain at 15 percent, the next $5000 will incur an ARF rate of 50 percent. The remaining OMV of above $10,000 will have an ARF rate of 100 percent .

Of the 8355 newly registered motorcycles here last year, 63 percent had an OMV of $5000 and below.

Those with an OMV of between $5000 and $10,000 made up 19 percent, while those with an OMV of above $10,000 made up 18 percent – or about 1500 – of all newly registered motorcycles here.

Some businesses are already trying to grapple with the new fee.

Mr Eugene Mah, managing director of Mah Pte Ltd – which distributes motorbikes from high-end brands such as Triumph and Aprilia – said he expected his business to be badly affected by the changes.

He said that for popular models such as the Triumph Street Triple 800, priced at $22,500, the firm will absorb the “bulk of the taxes” so the price will go up by only $1000.

“There are, of course, some models that are so severely affected that we can only absorb a percentage of the increase,” said Mr Mah.

However, Mr Ong Kim Hua, the local distributor for KTM motorcycles, said it was too early to say what kind of impact the new ARF would have.

“Those riding the more expensive bikes now may downgrade to mid-tier models in future, where they won’t be hit as hard by the ARF,” he said.

Mr Norman Lee, honorary general secretary of the Singapore Motor Cycle Trade Association, said some dealers have cancelled orders in anticipation of lower sales.

Members of the association – which represents motorcycle dealers, workshops and parts retailers – convened last night to discuss a response to the ARF.

Mr Lee said: “It is in the consumers’ hands right now. They will have to ask themselves, ‘Can I go on a smaller bike?’ ”

Consumers who ride big motorcycles are also disheartened.

Take Mr Muhammad Syahrul, 29, who upgrades his motorbike every two to three years. The aircraft engineer just saw his next target motorbike double in price.

He was planning to move on from his year-old $30,000 BMW S1000R to a BMW R1200GS, which cost $40,000 last week.

It will now cost around $80,000.

“Now, I really have to think twice before buying a bike,” he said.