MOTOR companies are coming up with innovative ways to entice car buyers put off by the recent cooling measures.
These range from a leasing deal that allows customers to drive away with a new Mercedes-Benz E200 with no downpayment to a buyback scheme that lets them own a Porsche Panamera for just $788 a month.
The arrangements are offered mainly by companies selling premium and luxury brands, as these are the ones most affected by the cooling measures.
In February, the Government restricted most car loans to 60 per cent of the purchase price - compared with up to 100 per cent previously - and imposed a tiered taxation system placing the heaviest burden on luxury vehicles.
For example, the Additional Registration Fee has gone up by about $1,400 for a Toyota Camry 2.0, but it is up by more than $8,500 for a BMW 520i.
The measures have led to orders for high-end cars being cancelled, and have put off many prospective buyers.
To counter this, Porsche agent Stuttgart Auto has come up with a scheme that gives customers a Porsche Panamera sedan at $788 a month, for three years.
Buyers will still have to cough up a 50 per cent downpayment of $235,000. But at the end of the third year, the company buys back the car at $235,000.
Stuttgart Auto sales manager Jason Lim said the scheme attracted more than 150 inquiries over one weekend, but the actual take-up rate was relatively low.
"In times of uncertainty, we're offering customers some certainty," he added.
Nevertheless, motor traders said consumers still prefer traditional hire-purchase deals as they are more familiar with them. They also like the idea of "owning" their car.
But Mr Say Kwee Neng, managing director of BMW agent Performance Motors, said: "Do you ever actually own a car in a hire-purchase agreement?"
He added that the response to leasing schemes had been "slower than what we wanted", but the deals seem most popular with 3-series and 1-series customers.
"It's a bit of an educational process," he said. "If you're acquiring a depreciating asset, don't you think a lease makes sense?"
Mercedes dealer Cycle & Carriage is offering a deal that gives customers a Mercedes E200 for $3,577 a month via a seven-year lease with no downpayment.
Under a traditional hire-purchase arrangement, they would need to cough up $124,000 up front, and make monthly instalments of $2,390 over five years.
The dealer's chief operating officer Eric Chan said multinational companies seem most receptive to leasing plans as they dislike the sizeable capital expenditures that come with hire-purchase deals.
For individuals, he said a lease is preferable for those who are financially-savvy and able to get good returns from cash otherwise tied up in a car downpayment.
Financial expert Leong Sze Hian said the suitability of each scheme depends on needs and affordability. He said the Porsche scheme is superior "purely from a financial perspective".
"But the problem with purely financial analyses is that affordability is not a factor," he added.