Downturn in COE prices cited as main reason, market player calls for lifting of import levy
Bumpy road for used car traders Shen Tat Enterprises, which had been in business for almost 30 years, has closed down and most of its cars were repossessed by lenders when it could not service its loans. ST PHOTO: JEREMY KWAN

The used car market is sputtering as sliding certificate of entitlement (COE) prices render stocks bought with higher premiums commercially unviable.

The slowdown, which started in July when COEs for cars up to 1,600cc fell to eight-year lows, has claimed at least one company.

Shen Tat Enterprises, which had been in business for nearly 30 years, has closed shop. Most of its cars were repossessed by lenders - including, reportedly, Maybank - when the company could not service its loans.

A Maybank spokesman said the bank "does not comment on specific clients".

The used car dealer, owned by Lim Tian Hoe and Eng Ah Lee, was uncontactable.

The fate of Shen Tat, which started in January 1989, is making the rounds in an industry caught in a COE downturn.

Singapore Vehicle Traders Association (SVTA) honorary secretary Jeremy Soh said the used car industry here is exposed to the unpredictability of COE prices.

"Things are very slow now... mainly because of the prolonged period of low COE (prices)," he said, adding that companies unable to adapt will find the going toughest.

His firm, Ricardo, has been "moving away from retail to become more of a service provider", he said. "We're providing extended warranty, financing and insurance."

SVTA president Michael Lim said the depressed COE environment is hitting sales of smaller cars hardest. The COE premium for bigger cars has eased, but that for smaller models has fallen drastically.

Although the used car trade has long been exposed to the risk of COE price swings, premiums usually rebound after two or three rounds of lows.

This time, however, COE prices for smaller cars have stayed weak for eight tenders.

Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "The market is really suffering. It's really bad this time.

"That's why we are appealing again for the $10,000 import surcharge to be lifted."

He was referring to the $10,000 levy which imported used cars are subject to. Mr Neo said this anti-dumping measure has outlived its usefulness because cars imported into Singapore must be relatively new, and are usually in good condition.

He said lifting the levy would allow used cars traders to have more options in planning their inventory.

According to Land Transport Authority figures, an average of 8,847 cars changed hands each month this year - down from 9,332 and 9,450 in 2017 and 2016 respectively.