Expats often find that buying or leasing a car is significantly more complicated here in Singapore than in their home countries. To clear up a few of the trickier aspects of the process, we spoke with Wayne Lim of Republic Auto.
For the benefit of newcomers, could you explain some of the acronyms of car ownership in Singapore?
OMV is the…? Open Market Value (or the cost of importing the vehicle).
ARF is the…? Additional Registration Fee (or the tax payable; this is between 100 and 180 percent). The higher the OMV of the vehicle, the higher the tax payable.
COE is the…? Certificate of Entitlement. The current COE (as of April 2014) for an open category vehicle is $84,100.
How is the total cost of a car calculated?
OMV + ARF + COE = Cost of car. For example, for a car valued at $20,000 (OMV), a consumer will eventually have to pay the OMV ($20,000) plus the ARF (e.g., $20,000) plus the COE ($84,100), along with the markup from dealerships (profits). This adds up to about $124,000++ out the door, which explains why a brand new Toyota Corolla Altis could be selling for $140,000.
So how might the cost of car ownership compare to the cost of getting taxis in Singapore – for example, for a person who takes two $20 cabs a day ($1,200 a month)?
If you were to buy a 2008 Mercedes-Benz E200K retailing at $96,000, depreciation per month on the vehicle would be $1,400, excluding road tax, insurance and maintenance. For a 2008 Honda Civic retailing at $55,000, depreciation per month is $905 excluding road tax, insurance and maintenance.
And what about leasing?
The same Mercedes-Benz E200K mentioned above will cost $2,800 per month to lease, including road tax, insurance and maintenance. Alternatively, you can lease a more affordable Japanese car for $1,700 per month.
For Mercedes-Benz leasing, Republic Auto offers the Star Lease Pre-Owned Program, which is designed for customers to enjoy driving their Mercedes-Benz cars without having to worry about the vehicle’s future value, depreciation risks and above all, the high down payment that comes with purchasing a car.
What’s the best approach for buying a good value car?
Buy one that is registered in 2007 or 2008. The Japanese Yen was relatively low at the time, and COE was at its lowest during those two years, therefore cars were cheapest during that period.
If you pay $55,000 for the 2008 Honda Civic mentioned above, you would receive 55 percent of the $21,000 OMV – so, $11,550 – upon de-registration. (When the COE expires after ten years, the car has to be de-registered and shipped out of the country or scrapped.) The difference between cost and return is $43,450, which comes out at $905 per month depreciation over the remaining four years of the COE.
Republic Auto is the home of certified pre-owned Mercedes-Benz luxury and sports cars along with other affordable pre-owned vehicles to buy, lease or rent: all Merc purchases are backed by extended warranties, rigorous inspections, certified service and history records.
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