By Christopher Tan, Senior Correspondent
NEW car sales slowed by nearly 30 per cent last year on the back of a big cut in COE supply. According to Land Transport Authority data, 68,862 new cars rolled off showroom floors last year, 29.3 per cent fewer than in 2008 and the lowest number in seven years.
But because far fewer cars were scrapped or exported, the car population grew despite the drop in sales. Car numbers rose by 4.8 per cent to 566,608 by end-December, busting the Government's 1.5 per cent growth cap.
Overall, the vehicle population inched upwards by 3.4 per cent to 925,518.
Car owners have put the brakes on buying - choosing to hold on to their current vehicles - in recent years. Reasons include the financial turmoil that gripped the world from the second half of 2008 to late last year, as well as the huge loans that many had incurred on cars between 2003 and 2008.
As 80 per cent of cars here are below four years old, dealers said there is naturally a lower demand for replacements, which in turn reduced the supply of certificates of entitlement (COEs).
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This contrasts with sales only 10 years ago when Singapore motorists were trading in their vehicles which were as new as two years old.
COE supply is largely determined by the number of vehicles taken off the road. Based on this factor, supply this year is expected to dip again.
'I think the quota will be cut by at least 15 per cent,' said Mr Neo Nam Heng, president of the Automotive Importers and Exporters Association. He said the fact that the car population grew despite a 29.3 per cent shrinkage in COE supply last year is a clear sign that the quota could be reduced further.
But other motor traders said determination of the supply must be tempered by the fact that the demand for replacement vehicles could accelerate in the near future.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motors, said: 'When the economy really picks up, those with four-, five-, six-year-old cars will come back onto the market with a vengeance. And there could be a real shortage of COEs then.'
The Government said last year that it was reviewing the formula by which COE supply is determined. It is expected to announce a new formula soon.
Last year's sizeable shrinkage in the quota has led to fierce competition among motor firms, a trend that is likely to escalate this year.
Toyota agent Borneo Motors was first off the block when it cut $6,000 off its Corolla and Vios tags over Christmas. The offer is good till Jan 20.
Rivals have responded, but Mazda Singapore is probably the most aggressive. It slashed about $8,000 off its Mazda 3 cars, bringing the price to $65,600.
'This is below cost,' said Mazda Singapore marketing manager Philip Lu. 'But we have no choice. We have to fight the market.'
Meanwhile, Borneo Motors secured Toyota's pole position in the sales race for the seventh year running in 2009 with 13,419 cars sold. Hyundai followed as a distant second, with 6,628 units.
Volkswagen made it to the top 10 bestsellers' list for the first time by doubling sales to 2,421 units. But the brand that chalked the biggest growth in the list was Kia - up 116 per cent to 4,299 cars.
Mercedes-Benz and BMW remained the only luxury brands in the top ranking. A star performer in the super high-end segment was Lamborghini, which outsold Ferrari once again.
It sold 50 cars, versus 32 Ferraris.
Lamborghini Singapore managing director Melvin Goh, however, played down his triumph, saying: 'It was a walkover because Ferrari had a change of dealership last year, and there were no cars from the factory for a while.'
Mr Goh nevertheless expects to match last year's sales this year.
christan@sph.com.sg
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