The shift from owning to…something else? 

A disruption of the normal means less disposable income – so will car buyers shift to alternatives, such as leasing or second-hand cars? 

“Households will try to be prudent with their spending in these uncertain times. As Singapore is a high tax country, the leasing or short term rental options need to be highly competitive in order to attract customers in a saturated market,” said Florian Weber, the general manager for Finance, Insurance and Leasing for the Eurokars Group.  “However, as long as employees are encouraged or required to continue to work from home, we anticipate that people will be reluctant to increase their expenditure on transportation.”

For second hand cars, the Land Transport Authority (LTA) still reported figures in May for car ownership transfers. They were on the upswing until COVID hit – in 2020 January, February and March saw 12,422, 12,863, and 14,405 transfers respectively.

April, with CB enacted, dropped to just 45 percent of that, or 6,505, and May was even worse with 4,930. That was likely exacerbated by the fact that it wasn’t strictly legal to deliver cars privately, though remote deliveries were allowed by the Ministry of Trade and Industry for some official dealerships. 

With the immense cost of buying a car, leasing or short-term ownership seems like a good alternative to taking public transport, since some may find taking a bus or train akin to playing Russian roulette.  

Even then, it’s a mixed bag on how things panned out here: Car sharing firms saw a demand rebound, but car sharing firm Smove went into liquidation, while other car rental firms are suffering, yet at the same time public transport ridership fell 80 percent in March. 

But even as COVID fallout makes people change their behaviour, like the digital showroom, alternatives are already in place: Most car dealership groups offer leasing options, with the more high-profile ones launched recently being BMW’s short-term lease programme Access, its long term leasing through BMW Flow, as well as Audi’s Audi-On-Demand short-term drive programme. 

“Even before the pandemic hit, we observed an uptake in the subscription and leasing models, but we expect accelerated growth in this business as individual mobility needs change due to the pandemic,” said Mr Wehner. 

Singapore is still a special case 

The only clear thing when it comes to the coronavirus and cars, is that global car sales have tanked, and even in this respect, we can’t say the same thing about Singapore. 

Singapore, as always, is a unique case and cannot compare to countries which have “open” car markets (i.e. not limited by a quota system like ours), and with COVID shutting down the main mechanism for car sales – the COE –  it’s still too early to tell just where the dice will land. Even though bidding restarts this week, it’ll take a few rounds to make sense of it all.

Here at least we can offer one certainty: When COE bidding restarts in July, it will be fully subscribed i.e. there will be more takers for a COE than there are COEs available. 

In other places, the coronavirus will change how business is done as well as how much business is done. In Singapore, COVID will change, and has already changed, how business is done as we’ve just seen. But how much business is done remains down to the other thing car drivers and buyers have long had to shape their behaviour around – the COE. 

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