Singapore: Used car sales down 7.7% in first two months of 2023, new car registration falls 23.8%

FEWER used cars changed hands in the first two months of 2023 compared with the same period last year, despite high certificate of entitlement (COE) premiums that would typically drive some buyers to shop for second-hand vehicles.

There were 1,143 used cars sold in January and February, a drop of 7.72 per cent from 2022.

The drop in used car sales was less severe than the fall in new car registrations.

With fewer COEs available in January and February 2023 than for the same period last year, the number of new car registrations was 23.8 per cent lower.

Over the past decade, the number of used car transactions was the highest in 2017 with 111,980 cars. In 2022, there were 91,238 used cars sold, compared with the 30,472 new cars registered that year.

Consumers turn to used cars as new ones become more expensive. However, fewer new cars being registered also means that there are fewer used cars being traded in, which tends to push used car prices up as dealers have to pay more to take them into their stock.

Used car dealerships said they are currently not in a big hurry to buy more used cars or pay high prices for them, as they have sufficient cars to meet current demand.

With rising interest rates, it becomes increasingly expensive for dealers to hold more used cars than they need.

Jason Tan from Lake View Credit said that on average, it is taking about a month for a used car to be sold at his dealership.

While this is an acceptable pace to move stock, he is wary about the general uncertainty surrounding the economy.

Other than bona fide used cars, there are also those that are actually brand-new ones that were registered by dealerships and never actually driven.

On used car portal Sgcarmart, The Straits Times found more than 250 listings of cars that were registered between 2022 and 2023 with mileage below 500km.

Among them are mass market models from Japanese brands as well as those from premium German ones like BMW and Mercedes-Benz. They include two BMW 216i Gran Coupe Sport that were registered on Dec 31, 2022, with just 10km on the clock.

Compared with a new one that retails for US$217,888, these “used” cars are priced at US$168,800.

Cars that are registered using COEs other than the Open category can be transferred to the next owner only after three months. This means that the dealerships would have to hold on to the pre-registered cars until then before the vehicles can be transferred to the next owner.

Industry watchers said the practice of motor dealers self-registering cars is not new.

Some dealers tend to do this near the end of a given quarter in a year when they are trying to hit their sales target to qualify for the performance bonus from car manufacturers, they added.

These payouts are said to be so significant that missing out could put the dealership’s profit and loss statement in the red.

This is why they are willing to bear the cost of the COE, on top of registering and holding on to these cars for a few months and selling them later at a discount.

It is likely that chasing after registration numbers in this way pushes the COE price higher than what it would be if there were only buyers trying to register cars to actual use.

After all, the pre-registered cars end up being unused for at least a few months before they are actually put on the road.

A senior industry veteran, who left the industry in recent years, said: “These dealerships do not want to pay more than what they need to for a COE to self-register a car, but if the COE premium goes up along the way, well, that is just part of the business for them.” THE STRAITS TIME