By Wilson Wong, Consultant, Frost & Sullivan Automotive & Transportation Practice, Asia Pacific
Singapore is probably one of the most expensive places in the world to own a car. This is due to the imposition of regulatory measures such as the Certificate of Entitlement (COE), high custom duties, and road usage charges such as Electronic Road Pricing (ERP). The country also has one of the most regulated automotive markets in the world due to its geographic constraints and the need to regulate traffic density.
In Singapore, a potential car buyer has to secure a COE before registering a car. Many car distributors in Singapore, as a service to customers, offer packages that include the COE. ERP is an electronic pay-as-you-use system of road pricing. It is designed to be fair, as motorists are charged when they use roads during peak hours.
Despite these measures, with a per capita GDP of approximately US$30,900, demand for automobiles is very high. Singapore’s strong economic performance and lower COE prices (vis-à-vis previous years) kept passenger car sales at around the 100,000 mark from 2005 to 2006.
2007 is also proving to be a watershed year for the local automotive scene, as it marks the arrival of Formula One, the world’s foremost racing event. This article examines the direction of the Singapore automotive market in 2007 and beyond.
Trends in the Passenger Car Market
Singapore is essentially a passenger car market, with 89 percent of vehicles falling into this category. This market is also largely dominated by Asian vehicle makers, which are largely represented by their authorized distributors: Toyota (Borneo Motors), Honda (Kah Motors), Nissan (Tan Chong Motors), Mitsubishi (Cycle & Carriage which also distributes Mercedes-Benz, Citreon, and Kia), and Hyundai (Komoco Motors). Most vehicle makers prefer to rely on their local exclusive distributors to leverage their existing networks and market know-how.