This is reflected in the number of cars taken off the road. The figures have been falling steadily the whole of this year to reach the lowest monthly number in five years.

According to figures just released by the Land Transport Authority, 4,499 passenger cars were de-registered last month - nearly 30 per cent fewer than in the same month last year.

For the first nine months of the year, the number of cars taken off the roads shrank by 20.5 per cent to 50,366. If the slowdown continues, the number of vehicles scrapped this year will be the lowest since 2002's figure of 64,089 cars scrapped.

From 2003 to 2006, motorists scrapped 84,000 cars a year, on average - which in turn fuelled a boom in new car sales.

Lower de-registrations translate to lower replacement demand, and car salesmen are beginning to feel this.

'Not too long ago, we saw customers coming in when their cars were three years old or so,' said a sales manager of a European distributorship. 'Now, they are in no hurry.'

Motor traders attribute the slowdown to hefty car loans buyers have been taking since the Monetary Authority of Singapore removed the 70 per cent, seven-year cap on car financing in 2003.

Today, it is not uncommon for loans to exceed the car price and spread over 10 years. This means that owners will have to fork out a sizeable lump sum in cash to redeem their existing loans if they want to switch to a new car.

Motor traders also point to the effects of a less generous scrap rebate, effective since 2002. It was put in place to curb the wasteful trend of cars being taken off the road before their certificates of entitlement (COE) expired at the tenth year.

Only 5 per cent of the 500,000 cars here are 10 years or older.

Again, the lower scrap rebate means car buyers will be less able to afford a new vehicle as frequently as before.

The slowdown in de-registrations will have an impact on car sellers and buyers, as de-registrations influence the number of COEs the Government will release.

'There will definitely be a reduction in COE supply next year,' said Motor Traders Association president Michael Wong, when asked about the immediate impact of the de-registration slowdown. 'COE premiums should go up in tandem.'

Whether premiums will actually rise could depend on other factors too, such as demand, trade observers noted.

Singapore Vehicle Traders Association president Neo Nam Heng said: 'Everybody is putting money in the stock market and property.

'They prefer to take the opportunity to make money rather than to change to a new car.'

The lukewarm demand for a new car seems to be affecting the low and mid-range brands.

High-end brands like Porsche and Ferrari are enjoying record sales this year.

christan@sph.com.sg