August 6, 2014 / 3:23 AM / 5 years ago

Singapore's supercar dealers fret as taxes, loan rules stall sales

SINGAPORE (Reuters) - Supercar dealers in wealthy Singapore are fretting over their future as higher taxes, new auto loan restrictions and a shift in tastes towards less ostentatious vehicles send sales plummeting.

Sales Manager Raymond Liu switches on the headlights of an Aston Martin Vanquish at their showroom in Singapore August 1, 2014. REUTERS/Edgar Su

While the roar of high-octane engines is a familiar sound in central Singapore, home to the third-highest ratio of millionaires per capita in the world, supercar showrooms are largely silent.

Now some dealers are setting up pre-owned divisions and throwing huge launch parties for new models in a bid to get business back on track.

“If this situation continues, we believe that supercar dealers will not be able to sustain a viable operation based on the huge infrastructure put in place as well as the high cost of running the business,” said Kevin John Chia, general manager of Aston Martin Singapore.

While tiny Singapore’s auto market is minute in global terms, its luxury car segment was, until recently, punching above its weight.

Last year it was the third-biggest market in the world for bespoke Rolls-Royce sales while Porsche is among the top 15 selling brands of car, something unheard of in western markets.

But new taxes started in March 2013 and curbs on car loans have sent sales of some supercar brands down by as much as 90 percent, figures from the Land Transport Authority show.

Two new Aston Martins, two Lamborghinis and 14 Ferraris were sold in the first half of 2014, compared to 16, 20 and 64 respectively in the same period a year ago.

Last March a new tax regime came into effect, taxing the first S$20,000 ($15,900) of a car’s open-market value at 100 percent, the next S$30,000 at 140 percent, and anything above S$50,000 at 180 percent. A new Aston Martin Vanquish now sells for S$1.088 million compared to S$880,000 previously.

“Even high-net-worth-individuals who can still afford to buy supercars will think twice about paying a substantially higher price for the same model,” said Melvin Goh, chairman and chief executive of Lamborghini distributor EuroSports Global Ltd.

Dealers are hoping new models like the forthcoming Ferrari California will lure customers back and are turning to the second-hand market where the tax regime is less prohibitive. Ferrari launched a pre-owned division in May.

Higher costs may not be the only deterrent to buyers. As supercars have became more common in Singapore, some connoisseurs are shying away from flashier brands.

“Where is the exclusivity? The days of the exotic are over,” said a 42-year-old commodities trader who already owns three supercars and declined to be named.

He’s now shunning the ultra high-end and paying S$600,000 for a BMW i8, a hybrid sports car, instead.

“I bought the BMW i8 because I don’t want to be seen as driving another supercar that half the people I know have,” the trader said.

(1 US dollar = 1.2456 Singapore dollars)

Editing by Rachel Armstrong and Matt Driskill

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