Singaporean drivers, brace yourself for possible new car delivery delays and increase in gas prices these coming months, with even EV drivers facing rising electricity costs.

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Updated March 3, 2022 – Possible new car delivery delays
First published March 1, 2022

SINGAPORE

Local prices for petrol have gone up, and we will possibly see electricity prices go up as well, due to the conflict between Russia and Ukraine. In addition, this may possibly affect the new car supply chain after international sanctions have been placed against Russia, which accounts for 38 per cent of the world’s palladium – a precious metal used in manufacturing catalytic converters.

Production disruptions

Porsche and BMW have become the latest carmakers to shut its European plants due to lack of parts from Ukraine, while Toyota, Mercedes-Benz, and Hyundai, announced that they would cease manufacturing in Russia. Ten other major car and motorcycle groups have now decided to freeze sales to Russia after its invasion of Ukraine on Wednesday.

A number of car brands were contacted for quotes with regards to Singapore’s car deliveries, most have yet to respond. BMW Asia told CarBuyer that: “The war in Ukraine also has a significant impact on the country’s automotive supply industry. Combined with the ongoing semiconductor bottlenecks, these supply limitations lead to production adjustments and downtimes at our European plants. Together with our suppliers, we assess the situation and define measures to secure production again as soon as possible.”

Increased petrol and energy prices

Last week, the Straits Times reported that four out of five oil companies here have raised pump prices by between six and 21 cents per litre as crude prices rise to seven-year highs, driven by Russia’s invasion of Ukraine. That’s due to supply disruptions as Russia is the second-largest oil exporter in the world, shipping some five million barrels of crude oil per day.

Oil traders expect oil prices to accelerate further if the Ukraine crisis escalates. This may lead to restrictions on Russia’s oil exports, which would spark an energy crisis, pushing oil and gas prices higher than ever.

Currently, the price of 95-octane fuel has gone up from around S$2.65 a litre in mid-January to around S$2.80 a litre as of mid-February. With the price of Brent crude oil (one of the three main benchmarks for crude oil prices per barrel) reaching a multi-year high, the possibility of further increase should tension amongst the two countries worsen, could mean higher diesel and petrol costs for motorists here. Of course, those were already at record highs even in early February. 

High energy prices have been plaguing global markets, with gas reaching record prices in recent months. Crude prices saw a rise of more than 15 per cent in January alone, with the global benchmark price crossing US$90 a barrel for the first time in more than seven years, as fears of a Russian invasion of Ukraine grew.

As Europe relies heavily on Russian gas, the ongoing battle in Ukraine does spark concerns as Russia provides Europe with around 40 per cent of its natural gas supply. European energy markets are now bracing themselves for a hit if the crisis in Kyiv does not improve.

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Singapore relies largely on natural gas for electricity generation. With electricity and gas inflation in Singapore hitting 17.2 per cent in January, any increase in global gas prices could impact a steeper increase in both electricity and gas rates here.

As Minister for Trade and Industry Gan Kim Yong said on Monday (28 February), “the cost of electricity for households and businesses, will go up as a result of rising global energy costs due to the crisis in Ukraine”. However, EV owners will still find it cheaper to own an electric vehicle (EV) given that EVs are still cheaper to run per km. Despite the inflation in prices soon to be set in motion, perhaps this would be a good time to switch to an EV as some electric vehicles (EVs) will become up to S$5,000 cheaper here thanks to additional rebates this year.

With the rising rate of GST soon to hit nine per cent some time between 2022 and 2025, the jump in living costs inevitably heightens the pressure for an average person living in Singapore. That being said, the recent ARF car tax increase could only spell trouble for higher-end Singaporean car buyers.

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