Despite announcements made by the Monetary Authority of Singapore (MAS) to ease loan restrictions on new motor vehicle financing earlier this year, the used car market instead has been witnessing burgeoning growth. January saw 9,281 used cars sold, a whopping 27% increase from the same period a year ago.
One reason for this trend is the consensus that a higher downpayment is still required for new cars, which serves as a deterrence to potential car buyers. Presently, to buy a decent new car in Singapore, the average downpayment required is approximately $40,000, which is over twice the average downpayment amount required for used cars.
Furthermore, one can also recover a larger proportion of a used’s car cost if scraped in the short term. This is in line with the increasing number of motorists opting to purchase older (6-9 year old) cars to tide them over, as they hope for COE prices to fall,in anticipation of higher de-registrations.
Many customers have also been holding back on big-ticket items in view of the slow economic outlook. This has further dampened the growth in the demand for new cars this year.
Apart from potential car buyers choosing used vehicles over their new counterparts for personal or household reasons, there has also been an influx of buyers choosing used vehicles for commercial use. Car rental firms and ride-hailing platforms, Uber and Grab, have also been competing by increasing their used car fleets to cater to huge demand.
Diversified motor group Prime is looking to expand its used car fleet by 67% to 400 used cars, while Hawk Asia Pacific added another 100 used cars to its existing fleet due to strong demand for rental cars.
The emergence of e-commerce taxi platforms Uber and Grab has contributed largely to this trend as well, by allowing drivers to earn money outside of their regular jobs by offering rides that suit their convenience. Apart from its flexibility, working for these companies part-time allows drivers to cover monthly instalments for used cars and its expenses easily, making this alternative to brand new cars extremely desirable to many.