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Tag: Volkswagen

  • 2016 COE trend and illogical used car prices

    2016 COE trend and illogical used car prices

    Why are used car prices so ridiculously high when COE prices are down? It does not make sense, or does it?

    New cars are actually cheaper (in depreciation) now

    A brand new VW Golf (Mk7) 1.2 TSI was going for $98.8K over the weekend. This translates to a depreciation of approximately $9.5K/yr. If you do a search for VW Golfs on the second hand market now, there’s nothing below $11K/yr, and most are averaging $12K/yr — even the Mk6 1.2 TSI ones.

    A brand new Subaru Forester 2.0 (non-turbo) was also going for $116.8K. This translates to a depreciation of only $11K/yr for a brand new feature packed car. If you look at the second hand market, there’s nothing below $12K/yr for a Forester.

    So what has caused used car prices to go topsy-turvy?

    Here’s what I think is happening:

    1. The loan curbs (min. 5 years + 40% downpayment) priced many people out of the market. The high downpayment meant that people with less cash could only buy older cars. 5 year old cars seem to be in a sweet spot.
    2. People are adopting a wait-and-see attitude in hopes of further COE drops, so they are buying used cars with short lifespan to hold out for another year or two before they get a new car in 2017-2018, the predicted the “COE tsunami” years.
    3. Rising interest rates and weakening global economy in general deters people from spending on cars or luxury items.
    4. Old cars with 1-2 years left are being bought by rental companies turning them into private Uber fleets.

    The Uber-iztaion of Singapore

    In mid-2013 — when COE was some $60-70K — I bought a Subaru Impreza 1.6A with slightly over a year left of life at just below $5K/yr. If you look at the second hand market now, Imprezas are going for around $10K/yr. That’s a whopping two-fold increase. There’s practically no automatic Japanese sedans below $7K/yr right now.

    This whole Uber thing took off in the last 1 year or so, i.e. some time around mid/late 2014 till present. I strongly believe this is what wiped a lot of 8-9 year old cars off the market. These old cars were the best targets for rental because the risks are low — if the car is problematic or destroyed in an accident, just scrap it.

    Uber, renew or buy?

    I’m being asked quite often: Should I sell my car and go public transport/Uber, or renew COE, or buy a new car now?

    If you can live with public transport or Uber, why not? It will be cheaper than any form of car ownership. I’ve done my math and any basic car ownership right now would cost you somewhere between $14K-16K/yr for the car, road tax, insurance, fuel, parking, etc. If you have a $1K/mth budget for Uber, I’m sure you’ll be going places comfortably.

    But if you really need the convenience of a car, and — here’s the important part — you have the cash to spare, you can either renew 10 years provided your car is in good mechanical condition, or buy a brand new car with better technology, fuel economy, warranty, etc. Used cars are just so ridiculously priced right now that it doesn’t make much sense.

    If you are thinking of selling your 5-year old car and going Uber till COE drops, IMHO, now is the time.

    Where will COE be headed?

    I think COE will still continue to fall a little bit over the next 1-2 years, but I think it should bottom out at around $40K+. There’s a general resistance around that point, because at $40K+ the entry level Japanese / Korean cars could be going for around $70-80K and that seems comfortable for most people (and spells trouble for a lot of used car dealers).

  • What does it really cost to own a car in Singapore?

    Update: Do also read the updated article I wrote here in 2014: How to buy a used car in Singapore

    OK, I read this article and felt I had to put in a few words of my own as it was not accurately represented.

    Before I move on, those who are not familiar with the basic taxation structure for cars in Singapore should read my earlier blog post.

    If you have understood the taxation structure in Singapore (I know, it’s a lot to swallow) you would realize that the author of the above article failed to take into account the minimum PARF rebate. The author also picked a car that’s way overpriced in the current market.

    Here’s the facts. A savvy car buyer would have looked at all available options. And to pick a Toyota Altis at the price of $105,988… are you out of your mind?

    Let’s take a Volkswagen Jetta. List price $115,800. Called VW, they have a $6,000 discount. So that brings the list price down to $109,800.

    The OMV of this car is $18,500, so that gives us a $9,250 PARF rebate (50% of OMV). The straight-line depreciation of the car over 10 years is hence $109,800 – $9,250 = $100,550.

    Now, that’s just the car. All taxes inclusive – GST, etc. are already priced into the list price.

    Next, the loan. Assuming if you’re buying a ~$100k+ car, you should must have some cash for downpayment. A wise tip here – at least downpay the minimum PARF rebate and don’t take a full 10 year loan or you will be in serious debt in an event you need to sell your car. If you don’t even have cash for downpayment – sorry to say but Taxi is your friend for now.

    So let’s say we take a 1.88% (compounded) loan over 8 years for the sum of $100,550, the interest works out to be ($100,550 x 1.88%) x 8 years = ~$15,123.

    Adding that to the original sum of the car you have $100,550 + $15,123 = $115,673. The monthly repayment would be $115,673 / 8 years / 12 months = ~$1,205.

    The rest is pretty straightforward… let’s use a table to add ’em up. Here’s the true month-to-month affordability of a VW Jetta 1.4 TSI as of Jan 2012. Note some variables like insurance, parking and ERP really depends on each individual’s profession and usage of the car.

    Item S$/mth
    Loan installments $1,205
    Insurance @ $2,400/yr, no NCD $200
    Road tax @ $620/yr $52
    Fuel @ 20,000 km/yr, 13km/l @ $2/l $256
    Servicing @ $800/yr $67
    Parking (HDB + Office) $200
    Others (ERP, etc.) $100
    Totals $2,080

     

    Now, that’s $2,080 for a VW Jetta. So by wise financial guidelines that you should not spend more than a third of your salary on a car, you (or your family) should take home at least $6,000 to buy a car like that…

    What if you (or your family) only take home $4,000 a month? Under $1,500 a month for a car… is it achievable? Answer is… YES! Pick up a 2005 Nissan Sunny for $23,800. Bargin a little bit and bring it down to maybe $23,000… and here’s the calculations.

    Actual car depreciation (2005 cars retain 55% of OMV) = $23,000 – ($13,000 x 55%) = $23,000 – $7,150 = $15,850.

    Loan = $15,850 over 3 years @ 1.88%: $15,850 (principal) + $893.94 (interest) = ~$16,744. This works out to ~$465 per month.

    Item S$/mth
    Loan installments $465
    Insurance @ $2,000/yr, no NCD $167
    Road tax @ $742/yr $62
    Fuel @ 20,000 km/yr, 9km/l @ $2/l $370
    Servicing @ $800/yr $67
    Parking (HDB + Office) $200
    Others (ERP, etc.) $100
    Totals $1,431

     

    I know what some of you may be thinking – it’s just $600 more a month, why not get the Jetta. Well, $600 can kill you – that’s $7,200 a year. I eat about $600 per month on average so it really makes a lot of difference. I can either eat plain bread or have good meals or I can save that and go for a crazy vacation. It’s all about balance.

    Of course on top of just plain numbers, the value of having the convenience of a car is hard to quantify – especially if you have a pregnant wife, or an old folk, or just simply need to haul that big box from Ikea.

    Public busses and trains aren’t fair comparisons as they are mass public transit and may not bring you to your doorstep. Taxis on the other hand are getting relatively expensive and inconvenient – the queue, the wait, etc.

    So if it doesn’t break your bank – for better quality of life you should consider a car.

    At the end of the day… buy wisely, drive safely. Cheers!

    – Justin

  • Another lazy Sunday; off to more car showrooms…

    OK, it was another idle Sunday not knowing what to do, so we decided to go poke around more showrooms after lunch at Old Town White Coffee along Chun Tin Road (Bukit Timah).

    First stop, Volkswagen

    We test drove the new VW Passat 1.8T (not the Passat CC) which was launched just 2 months ago. I was pleasantly surprised by the car – powerful, quiet, comfortable and feature packed.

    Assisted by a light pressure turbo, the engine’s torque can be felt as early as 1,500 rpm. By 2,000 rpm there was sufficient torque to haul the heavy 1.5 tonne car around. The 7 speed DSG was such a marvel – you wouldn’t notice it shifting. Moving off from a traffic junction, it shifts from 1 to 2 in about a second… before you know it, you’re at gear 7!

    Sound insulation was excellent given the 18″ alloys and low profile tyre – it’s about as good as it gets.

    I like the hold assist feature – it keeps the car stationary once you bring it to a complete stop; to get it going again simply just tap the accelerator. This is particularly useful at traffic junctions but when you are stuck in a traffic jam or are parking your vehicle, Hold Assist can get annoying. It can be turned off by flicking a switch beside your gearstick.

    On top of that, the Passat comes with a built-in GPS navigation (beautiful maps and touch screen, BTW) and a reverse camera with direction guide, i.e. it draws a line of your intended direction of travel based on the angle of your steering. This is nothing like the bolt-on 3rd party reverse cameras in JDM/KDM rides.

    For the price of $15x,xxx (after discount), this is easily the most value-for-money buy in the luxury sedan category. Not to mention the boot is HUGE!

    Comfort: 9/10 – Quiet, spacious and smooth ride. Great workmanship. Floor mounted gas pedals reduce fatigue on long distance drives.
    Features: 9.5/10 – Everything in, except for bluetooth. Love the navigation.
    Engagement: 9/10 – Very forgiving on the inputs but still precise. Engine torque kicks in quickly.
    Design: 7.5/10 – A little squarish for my personal taste, but still looks reasonably modern.
    Value: 9.5/10 – Certainly value-for-money for a car this size.

    Second stop, Audi

    So we went next door to the big brother, Audi, and tested the A4 1.8T. Vorsprung Durch Technikkkk… *boop boop* *boop boop*.

    The first impression of the A4 was so-so. Although the interior bore some resemblance to VW, it was actually lacking in features probably because the A4 is already a 3 year old model (launched in 2008).

    In normal (“Auto” Drive Select) mode, the engine felt slightly more responsive than the Passat and is perfectly suited for day-to-day city driving. Switching Drive Select to Dynamic mode made the steering heavier and improved throttle response. However, the gearbox downshifts a little too eagerly for my liking though it may be just my personal preference.

    What I did not quite get used to was the brakes – it was overly sensitive. For those who drive their car like they stole it, this aggressive braking behavior is fine. But for older folks, maybe not – they might unintentionally execute an emergency brake at a traffic junction. So now you know folks, don’t tailgate an Audi driven by an uncle.

    Oddly the sound insulation was a fair bit poorer than the VW (older car?) and the sportier drive actually made wife sitting at the back a little uncomfortable.

    No GPS navigation, a lower resolution display than it’s sister VW and rivals BMW and Volvo (more on that later), plus a not-so-intuitive joystick on the front panel instead of having it beside the gearstick (like the BMW) takes a lot of points off the A4. For a premium brand, from Premium Automobiles, I’d expect more. It does however feature bluetooth connectivity for your mobile phone – the Passat didn’t.

    For the price of $18x,xxx (after overtrade) for the “Ambition” model, it’s not a very good buy. They have a cheaper “Limited Edition” model at $15x,xxx (after overtrade) but it lacks lots of features, including LED Daytime Running Lights (DRL) which are probably the only other reason why you’ll buy an Audi!

    Also, just like VWs, Audis are FWD. For an additional $10k, you’ll get a Quattro 4WD; the rivals (BMW 3-series and Mercedes-Benz C-class) are RWD in comparison at similar price ranges.

    Comfort: 8.5/10 – Gear downshifts a little too quickly when accelerating in dynamic mode, brakes a little too sensitive for uncles. No floor mounted gas pedals!
    Features: 8/10 – No GPS, low resolution screen. Response of the MMI is a little laggy also.
    Engagement: 9/10 – Engine is powerful and responsive, 8 speed gearbox shifts seamlessly, unfortunately it is a FWD.
    Design: 8.5/10 – No DRL for “Limited Edition”, interior looks cluttered and confusing.
    Value: 7/10 – You can get a fully packed version of a VW for much lesser, or a fully-packed BMW with all the bells and whistles for an extra 10k.

    Third stop, Kia

    I hopped by Kia to take a look at the new Kia Optima K5. At $119,xxx it was indeed the cheapest of all the luxury sedans.

    The K5 had a fair bit of bells and whistles, although nowhere near the VW Passat. Factory fitted bluetooth, rear air-conditioning, electric memory seats, auto headlights, rain sensors, paddle shifters, cruise control, and the start-stop button made it stand out from the other KDM/JDM rides.

    According to the sales guy, the new units of the K5 arriving in Q3 2011 will also feature 6 airbags (instead of 2), a panoramic sunroof and a in-dashboard LCD display which is a huge step in closing the Continental vs KDM gap.

    Unfortunately I cannot rate the car yet – the sales guy was extremely talkative and that actually prevented me from asking for a test drive as it was getting late. I will try to get a test drive soon!

    Fourth stop, Volvo

    Since Volvo was just next door, I drove by and took a quick glimpse at the new Volvo S60. The built-in LCD was beautiful and in my opinion better than VW’s and Audi. The screen was of a very high resolution, similar to that of the new BMW iDrive (CIC). The controls were intuitive and lag-free and I loved the simplicity of the interior.

    One thing I didn’t like though was the type of leather Volvo uses – they are prone to cracking after 3 years. I’m surprised they have not changed the leather material.

    I didn’t have much time to look further into detail or ask for a test drive, but at first glance the S60 looks very promising. I will try to find out more soon!