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The pre-owned route
Costly certificate of entitlement, coupled with much tighter financing regulations implemented last year, have put brand-new cars beyond the reach of the majority of buyers. The curb on car loans is perhaps the biggest barrier now to buying a car, with the hefty "deposits" only affordable to those who are very "liquid".
The market situation has spurred dealers to offer leasing programmes, as they allow consumers to get a car without coughing up a lot of cold, hard cash upfront for the 40-50 per cent downpayment required by law. But if you'd still prefer to own your car rather than to "rent", then you best bet would be to shop for a used car.
Although pre-owned cars are also subject to the new loan regulations, they require less downpayment compared to brand-new vehicles and have lower annual depreciation. Also, unlike with leasing, car owners can offset the purchase of their next car by using the preferred additional registration fee (PARF) rebate and remaining COE "paper value" if the vehicle is scrapped before its 10th year.
For example, a brand-new MINI Cooper that costs $142.8k has an open market value (OMV) of $25k (at press time) would require a downpayment of $71.4k, whereas a five-year-old example that costs $80k with an OMV of $27k needs a downpayment of just $40k. And while the new MINI depreciates at roughly $13k yearly, the used on that was registered in 2009 depreciates at about $9k per annum.
(To calculate a vehicle's average depreciation, subtract the PARF rebate from its selling price and divide that figure by the number of years left on its COE. The PARF rebate is 50 per cent of the Additional Registration Fee in the COE's tenth year.)
To get a general idea of what's available in the used car market, we did a quick search on SPH portal Sgcarmart.com using three common price points for five-year-old cars - $75k, $100k and $150k. At the $75,000 mark, the most popular model by far was the Volkswagen Golf, while the Audi A4, BMW 320i and BMW 520i had the most listing in the $100,000 category. The most advertised model in the $150,000 category was the Mercedes-Benz E-Class.
Quality pre-owned cars can also be found at the authorised agents for major car brands, many of which now have active subsidiaries selling pre-owned models. Compared to small- and medium-sized firms, these bigger players offer clients a, well, bigger package that includes multi-point mechanical checks, warranty coverage and after-sales support.
Examples of these dealers include MINI Next and multi-brand distributor Wearnes Automotive's Pre-Owned division, which offers both Japanese and European models.
According to a Wearnes spokesperson, their used cars do not have age or mileage restrictions, but to reassure customers, each vehicle goes through a multi-point inspection and a four-stage grooming process. For added assurance, each car sold also comes with 24-hour roadside assistance valid in Singapore and peninsula Malaysia.
If you're searching for "slightly used" vehicles, keep a lookout for demo car sales at dealerships. Demo cars are usually low-mileage test-drive units, but you'll also find company vehicles (driven by managers and directors) being offered. BMW agent Performance Motors also sells cars supplied as limousines special events, but as always, the higher-mileage vehicles are the ones with better discounts.
Brand-new cars are likely to remain prohibitively expensive until 2016, which is when the COE supply is expected to increase significantly due to the scrapping of cars from the 2005-2008 era of generous COE quotas. Until then, aspiring car owners can explore the pre-owned route.
The Next option
"Unconventional" buyers looking for an equally offbeat ride could consider MINI Next, the brand's official pre-owned arm, which launched in Singapore in December. According to MINI Next manager Patrick Tan, the dealership aims to give clients better peace of mind through their standard 12-month/120,000km warranty on all vehicles. Apart from undergoing a 360-degree check, the MINIs sold here come with full service histories, are less than five years old, and have clocked less than 120,000 kilometers.
Get a copy of the February 2014 issue of Torque to read about the latest on all things to do with cars, in the most exciting ways. Torque, published by SPH Magazines, is available at all newsstands now.