Abstract
Singapore' s new vehicle market continues to contract in early 2009, prompting
BMI to forecast
downwards in the latest Singapore Automotives Report.
Annual sales for the year ending February are
down 16% year-on-year
(y-o-y) despite an earlier belief that an over-supply of Certificates of
Entitlement
(COEs) would lower premium prices and boost sales. Moreover,
if the number of COEs issued is reduced
later in the year and fuel prices
rise, growth will be further eroded. Consequently, BMI has lowered its
forecast by around 14.5%. From 2010, the market should become more stable as
the economy shows
signs of recovery.
One contrasting area of growth is
vehicles powered by compressed natural gas (CNG). Rocketing petrol
prices
in 2008 led to a tenfold increase in the number of CNG vehicles. The number of
these cars on the
road has leapt to 2,444 while CNG taxi use has
quadrupled to 977 units. A report in The Straits Times
highlighted the
growth of CNG power in the commercial segment. The budget in early March
secured the
rebate on purchases of green vehicles until 2011. This rebate
takes the form of a 40% cut in registration
tax for cars and a 5% cut for
commercial vehicles. From 2012, however, the government will tax CNG at
the pump; therefore demand is likely to be concentrated in 2009-2011.
BMI' s Business Environment Rating leans towards a positive scenario, as
Singapore has climbed two
places to rank 12th with a rating of 45.2,
compared with 42.7 in the previous ratings, with an increase in
its
country risk ratings. Along with Thailand it has the highest number of free
trade agreements completed
for any Asian market. However, in industry
terms, the lack of domestic production facilities and the
imposition of
vehicle quotas, which restrict potential sales growth, weigh on the overall
rating.
The market continues to attract major multinationals. In 2008,
Toyota Motor, including Lexus, continued
its dominance of the passenger
segment with a 25.49% market share. Honda Motor made gains to close
right
in on its compatriot with a 25.26% market share. There is then a significant
gap between second and
third place with Mitsubishi Group on 7.05%. In the
first two months of 2009, Toyota retained its lead
with a 28.81% share of
the passenger market and 23.18% for commercial vehicles. Honda also held on
to
second place with 17.45% of passenger sales, while Mitsubishi was still
the commercial segment runnerup
with 19.62%.
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