[top: Following a drop in COE prices for bigger cars, Honda agent Kah Motor has cut the prices of its larger models.]
THE year's car sales look set to be the lowest in recent years.
Preliminary figures from the Land Transport Authority and Motor Traders Association indicate that the year will end with about 97,000 new cars put on the road - 9 per cent fewer than last year's figure and 17 per cent down from 2006's record.
This year's sales are the lowest since the 96,861 cars sold in 2004. But it could - some say should - have been lower.
Car sales in Singapore are largely determined by each year's supply of COEs (Certificates of Entitlement to own vehicles) and observers believe this year's quota could have been smaller.
Mr Cheah Kim Teck, chief executive (motors) of multi-brand agent Jardine Cycle & Carriage (JC&C), said it might sound strange for "someone from the trade" to say it but "I...feel the market should have a smaller COE quota".
Like many of his peers, he said the $2 COE crash last month - which triggered a collapse of car resale values - was a sign of an oversupply.
The Singapore Vehicle Traders Association and the Automotive Importers and Exporters Association have made an urgent appeal to the Government to cut back on the supply.
Ms Tan Kheng Hwee, president of the Motor Traders Association, expects "the number of COEs available from April 2009 onwards will be cut".
Despite that, she believes COE premiums will hover around $5,000 next year - down from 2008's average of $15,000 to $17,000 before last month's collapse.
However, she said premiums will start to rise "very fast" once the economy recovers. "It is definitely a buyer's market right now," she added. "Like most businesses, car distributors are very keen to reduce their inventory and improve cashflow, so good deals abound in showrooms."
Due to the shrinking market, some car agencies are starting to downsize.
Chevrolet dealer Starsauto is looking to sell its Kampong Ubi showroom while JC&C will be giving up its current rented premises for Citroen in Leng Kee Road.
It will be moving the French brand to its facility in Alexandra Road, where it also houses Mitsubishi and Kia.
Sales forces are expected to be trimmed as well, with one company forecasting a halving of its team in the next two years. Not all is doom and gloom though. JC&C is spending $10-$13 million to refurbish its Pandan Garden premises. It is expanding its vehicle storage capacity and making room for a used-car business.
This year, the company sold 3,613 Mercedes-Benzes to reclaim the German marque's position as the top-selling luxury car here - an honour it had lost to archrival BMW over the last three years.
BMW, distributed by Sime Darby's Performance Motors, moved 3,439 cars up until Dec 21. Toyota remained Singapore's bestseller for the sixth consecutive year, but runner-up Honda is fast closing on its lead. The two brands were the only ones which sold more than 10,000 cars each. Mr Koh Ching Hong, managing director of Toyota agent Borneo Motors, admitted that the pole position had been at some expense of profit margins.
"We've been pretty aggressive in our pricing... 2009 will be a challenging year but we are cautiously optimistic.
"We are still aiming to be No 1."
christan@sph.com.sg
This article was first published in The Straits Times on Dec 31, 2008.
