Interest in used cars returns - for now

Buyers flock to dealerships after MAS suspends loan curbs for 60 days

Sales are picking up for used-car dealers, a day after the Government temporarily suspended its loan restrictions on some second-hand vehicles.

More people turned up at used-car centres across the island, hoping for a good deal.

Used-car dealerships in Turf City, Commonwealth and Ubi told The Sunday Times that the number of shoppers rose by at least 50 per cent. And they were not just browsing.

A check with 10 dealers found that they sold between one and three cars yesterday, a far cry from a month ago when sales all but dried up despite some sellers slashing prices by a third.

Cosmo Automobiles' managing director, Mr Eugene Chng, who sold two cars yesterday, said: "It is better than nothing; at least people are coming."

The temporary reprieve came after repeated appeals by hard-pressed traders to the Monetary Authority of Singapore (MAS) to hold off the loan curbs on used cars bought by dealers before Feb 26, when the new restrictions kicked in. The curbs limit car loans to no more than 60 per cent of the purchase price. The loan tenure also cannot go beyond five years.

Yesterday, MAS suspended the curbs for 60 days but the reprieve only applies to fewer than 7,000 used cars, which were in stock before Feb 26.

Despite the higher interest in his cars, Mr Chng ruled out any price hikes because he wants to sell off his stock. "You only have a 60-day window of opportunity. I don't want to play with fire and risk bigger losses," said the dealer, who has already lost $300,000 when he sold his 25 cars last month for less than what he paid for them.

Mr Eddie Loo, managing director of used-car trader CarTimes Automobile, is also hoping to sell off the 37 cars in his old stock within the next two months. He is looking at alternative plans to stay afloat as well once the curbs hit again.

Mr Loo, who is also the vice- president of the Singapore Vehicle Traders Association, is mulling options like down-sizing showrooms or expanding the parallel import of new cars.

He also said that the industry is facing an uncertain future. "People (car owners) will have to get used to the new normal of selling their cars at a lower price," he added, because traders will find it tough to find buyers for them due to the loan curbs.

Ms Lee Bee Wah (Nee Soon GRC) was one of several MPs who raised the plight of used-car dealers during last month's Budget debate.

When contacted yesterday, she said: "We understand the need to curb the growth of cars and impose financial prudence but I'm happy that the Government is willing to listen to feedback and flexible enough to do something to lessen the pain of car traders."

Engineer Simon Lim is hoping to get a five-year-old Honda or Mazda without stumping up more than $10,000 upfront.

The 34-year-old, who is likely to get a 70 per cent loan for his car, said: "I thought I had to stick with public transport for a few more years and save up more, but it looks like I can fulfil my dream to own a car very soon."

jermync@sph.com.sg