Buying a Car in Singapore

Singapore is the most expensive country in the world to own a car and this is thanks to its Certificate of Entitlement (COE). Finding ways to reduce these costs can make parting with your money that little bit more enjoyable.

This article was first published in the Orient magazine #64, 15th December 2017.
By Benoit Ratigan, Consultant, Cars and Yachts
 
Singapore is the most expensive country in the world to own a car and this is thanks to its Certificate of Entitlement (COE), which is a system based on a quota of licenses issued by the Land Transport Authority (LTA). Successful winning bids in an open bid uniform price auction grant the legal right of the holder to register, own and use a vehicle on Singapore roads for a period of up to 10 years. The cost of a COE is re-evaluated every two weeks and when demand is high, can exceed the actual value of the car body.
 
When looking at purchasing a car, whether new or pre-owned, a few options are available to you. You can approach a Parallel Importer, otherwise known as buying a PI car. The other option is to go through a single brand authorised dealer. And last of all, privately. Purchased privately, your pre-owned vehicle may be slightly cheaper than done through a dealer. However, should anything be structurally wrong with it, you will not be covered by the lemon law which all pre-owned car dealers in Singapore have to cover as standard.
 
Here are some of the main differences between Parallel Importers (PI) and Car Dealers:
 
  • PI cars are generally around 10 - 15% cheaper than cars from a single brand dealership, which has higher overheads such as larger showrooms in exclusive locations, higher costs of advertising and staffing, as well as pricier warranties and servicing programs.
  • Single brand dealerships can only sell one brand and cannot import nor can they stock Parallel Imports.
  • Parallel Importers work with more than one brand and can also bring in one-off special orders that may not be readily available in Singapore at the time. Requests are made directly to the manufacturers and specific add-on options can be included.
 
When purchasing a new car from a Parallel Importer, it is well worth noting the following:
 
1. Warranty
Make sure that you have a warranty that is covered by a reputable insurance company and workshop. Most of these are done through third party warranty programs – included in the purchase price of cars typically – which will keep you well protected in the eventuality that either the parallel importer or the workshop should cease its operations.
 
2. COE
These are allocated through a bidding system and some dealers will offer alternatives to limit your exposure to price fluctuations. You may wish to consider a guaranteed COE without top-ups, also known as “1 bid guaranteed”, which locks the price of the COE in. Another approach would be to choose a 4-bid guaranteed option, which exposes you to more risk. And even if the car value is a little cheaper at the start, any increase in COE value will need to be covered by the purchaser. 
 
On the other hand, if you’re looking for a pre-owned car with a few years left on the COE, you may be entitled to some monetary value when you scrap the car at the end of its first 10 years - called the PARF value. Scrapping a car here in Singapore feeds the international pre-owned car export market and is not what one usually associates with when thinking of scrapping a vehicle anywhere else in the world. 
 
These vehicles for the most part are in very good condition and some people chose to extend the COE for an additional 10 years, which can also be done with a pre-owned vehicle. Otherwise, this is a cheaper alternative, as one can renew their COE for a period of 5 years at which point the vehicle will have to be scrapped.  
 
3. Trade In
When upgrading a used car to a brand-new car, you will generally get a better deal when selling the old one privately first. For a small fee, some pre-owned car dealers may offer to work with you on a consignment basis, allowing you to showcase your car in one of their showrooms for a set period of time. Whilst being advertised online throughout various trade platforms, your car will receive added exposure to the dealer’s clientele and members of the public walking by. You may also wish to get your car valued as this amount could be used to offset the price of a new car or be sold to the dealership directly – dependent on condition, age and model.
 
4. Hidden Charges
It is important to confirm with the dealer that you are working with, that no additional hidden charges will apply even after the contract has been signed as this can sometimes happen. 
 
The above information should help demystify some of the processes of buying a car in Singapore. Once the keys are in your hand, the highways in South East Asia will be a pleasure to cruise over. 
 

 

About the Author:

 
With a background in logistics and shipping, Benoit Ratigan worked as a yacht broker prior to setting up his own business consultancy (IC2Group Pte Ltd) focusing on developing new business for his clients. He is currently engaged with Cars and Yachts as a yacht consultant and manages all matters related to yacht owning and the yachting lifestyle. 
 

About the Company:

 
Cars and Yachts Pte Ltd is a Parallel Importer and specialises in the Sale and Purchase of new and used cars as well as brokerage yachts. They believe in breaking down the misconceptions people have when dealing with car sales companies and yacht brokerages. For further information, please visit www.carsyachts.com.sg or get in touch with us at visitus@carsyachts.com.sg | +65 6509 8118
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