Sales of super sports cars have slowed to a crawl since the tax hikes and loan curbs of last year took effect, with registrations in the first half of this year up to 90 per cent lower.
Only 14 units of Ferrari sports cars were registered between January and June, for example, compared with 64 units in the corresponding period last year, said the Land Transport Authority (LTA). The LTA’s numbers include both official and parallel imports.
At McLaren, four units were registered in the first six months, against 17 a year ago.
Things were so bad that one dealership with a waiting list apparently had some customers deferring registration of their cars when the vehicles arrived.
One person familiar with the situation said: “They asked to pass their allocation to the next buyer in line.”
The year-to-date dip is further magnified by H1 2013’s high base. After a tiered Additional Registration Fee (ARF) structure and new vehicle financing restrictions were imposed by the Monetary Authority of Singapore from Feb 25, 2013, many buyers of such high-end sports models “fast forwarded” their purchases in order to beat the cooling measures.
This was possible because transferable Category E or “open” COEs are valid for three months, while non-transferable Category B COEs for big cars expire six months after they are secured.
After the registration rush, demand tapered immediately.
At Ferrari’s Italian rival, Lamborghini, only two units have been registered this year – an Aventador coupe and an Aventador roadster, which start at S$1.588 million.
But Lamborghini’s situation is compounded by the fact that sales of its entry-level Gallardo model, which used to cost between S$800,000 and S$900,000, ended in mid-2013.
However, Lamborghini hopes to make up for lost time when its replacement, the Huracan, starts arriving in early September. It is understood that so far, a few dozen units of this S$1.168 million car have been booked.
The relatively strong demand for the Huracan is what some supercar dealers now call their biggest problem.
“Unless it’s a new model, something that is considered ‘worth buying’ for its novelty, you won’t get many customers these days,” said the director of a sports car dealership.
He said that it’s because buyers find it hard to stomach the increases in ARF, which went from a flat rate to being a progressive tax.
“Take what used to be a roughly S$1 million car early last year,” he said. “Suddenly, the price goes up by over S$200,000. It’s still the same car, but now it costs 20 per cent more. Buyers don’t like paying more for the same thing. But if it’s a new model, they don’t mind as much.”
The 50 per cent cash downpayment is another roadblock.
“It’s a double whammy,” said the director. “But it’s not a question of affordability, because these high net worth individuals are still spending on luxury watches and overseas properties. They just don’t feel good about the credit terms, or prefer to use the cash for other things.”
The managing director of another high-end dealership described the high taxes as a “mental block”.
“It’s affecting the whole price spectrum and it will take time to overcome. Those who used to take high loans can’t do it now, while those who can afford it find the price hike hard to justify.”
Fortunately, new buyers – that is, those who are new to the super car segment – are less affected by the tax increases.
The managing director said: “They have no basis for comparison, so they don’t feel like they are paying more.”