First-time car buyers disappearing fast

After financing restrictions kicked in, not many can afford the hefty downpaymentSingaporeIT APPEARS the first-time car buyer is becoming a rare species in Singapore, saved from extinction only by wealthy parents.mini storageAccording to some motor distributors here, the number of first-time buyers has dropped sharply from six months ago when the Monetary Authority of Singapore (MAS) introduced vehicle financing restrictions. Since Feb 25, a 40 per cent cash downpayment is required if the OMV or open market value of the car being bought is below $20,000, and 50 per cent if the OMV is above $20,000.So if the average entry-level car costs $120,000, then the 40 per cent downpayment would come up to $48,000."If you are young and have just joined the workforce, it is unlikely that you have $50,000 in spare cash," said a Kia spokesman. As a result, the number of first-time buyers of the Korean brand is now "5 per cent or less, compared with 30-40 per cent six months ago"."It has come down drastically because of the loan curbs," he said. "These days, our customers are mainly replacement car buyers or multiple-car owners."When it was possible to borrow 100 per cent of the car price to be repaid over 10 years, a buyer could drive out the showroom in a new Kia for as little as $500, or what the monthly instalment amounted to.Over at Mazda, it is the same story, with this particular segment of buyers slipping from 30 per cent half a year ago to less than 10 per cent today."Our buyers are mostly repeat customers; first-time buyers cannot afford the downpayment," said a source.One interesting development, however, has been the jump in the numbeself storage of customers paying the full amount in cash."Before the current MAS regulations, about 10-20 per cent paid in cash. After the MAS regulations, 40-50 per cent pay in cash!" His explanation? "Nowadays, only those who are cash-rich can buy cars."But one observer noted that the trend is brand-specific - not all volume makes are experiencing a similar plunge in first-time buyers. This is because some budget brands were already hurt by rising certificate of entitlement (COE) premiums even before the loan curbs came into effect earlier this year. COE premiums began skyrocketing more than two years ago when the COE quota contracted sharply.As first-time customers of entry-level cars are priced out of the market, it seems that at least one luxury brand is enjoying the opposite effect, if only because of an expanded model range.At Mercedes-Benz, the number of first-time car buyers is "traditionally a very small percentage because you have to have rich parents"."It is very unlikely that you yourself are rich because you don't accumulate that kind of money at a young age," said a senior executive.But what is happening as the brand with the three-pointed star introduces new and trendier models is that there are more first-time car owners, as opposed to first-time car buyers. "We are seeing more kids bringing their parents to the showroom to book a CLA-Class or A-Class," he said. The Mercedes-Benz line-up starts with the A200 from $156,000."Of course, most owners are repeat customers, and there are more upgraders because of the new models being introduced. But it also looks like more parents are buying a Mercedes for their children."迷你倉