In a bid to rev up business squeezed by loan curbs introduced six months ago, motor firms are starting to roll out no-frills car leasing plans which require lower monthly payments.
They come on the back of "traditional" leasing plans introduced as early as May to woo buyers.
But response from drivers has been lukewarm, despite advertising and marketing efforts by several firms to drum up interest.
Perhaps it is still early days, but Mr Anthony Lim, director of credit company Kenso Leasing, said: "It's the Asian mentality that... only those who can't afford to buy, lease."
Another main obstacle is that traditionally, monthly payments of a lease are typically far higher than monthly instalments of a hire-purchase plan.
The fact that these leasing plans cover such expenses as road tax, insurance, maintenance and replacement of the car do not seem to sway many drivers. To bring them around faster, firms such as Cycle & Carriage (C&C) and Volkswagen Singapore are offering plans in which they have trimmed such frills as insurance and maintenance, to make them more affordable and attractive.
Volkswagen started its leasing programme for the first time 21/2 weeks ago and has garnered only eight new converts. Its general manager of sales Daniel Chong attributed it to Singaporeans being "unfamiliar" with leasing, although his phone has been ringing off the hook with inquiries.
At C&C, a five-year lease of a Citroen Grand C4 Picasso MPV is $1,888 a month. Without maintenance, a customer pays $100 less every month. For a Kia Forte K3 sedan, the company cuts $150 off its monthly rate of $2,069 if maintenance is excluded.
While individuals are cool to the idea, more companies are warming up to leasing, said the Leasing Vehicle Rental Association's president Peter Cheong. Business has grown "significantly" since car-cooling measures kicked in six months ago, he said.
Individuals make up less than 20 per cent of the new contracts, he added. But he expects the proportion to grow. "I believe private individuals will slowly shift towards leasing, which is widely accepted in Europe and America."
Mr Steve Poh, general manager of multi-brand Wearnes Automotive's used car division, said leases used to target large corporations when he entered the industry about 30 years ago.
"Plans were fairly straightforward. But today, there's a lot more flexibility," he added.
Apart from letting people opt out of maintenance and insurance, most lease providers allow the cars to be driven by more than one driver and across the Causeway. They also have no cap on mileage clocked.
Opel agent Auto Germany's director of sales David Pang pointed out that leasing customers are not saddled with a depreciating asset.
This is crucial, "especially since it is expected that... there will be more COEs (certificates of entitlement) and prices are expected to fall", he added.
Still, drivers hold back and a key reason may be that in a lease, the car is registered in the name of the lessor. Businessman Dave Chng, 44, however, points to the relatively high monthly payments. "Also, at the end of the lease, you don't get anything, no resale or residual value," he said. "I still believe in owning my car."
On the other hand, oil broker Peter Lim, 53, is willing to consider leasing: "Some of the plans seem interesting, but I'll need to take a closer look."
