Car leasing business gaining popularity in Singapore

SINGAPORE: The car leasing business is gaining popularity in Singapore.

With inflated car prices due to the high Certificate of Entitlement (COE) prices, potential car buyers are now turning to leasing options.

Industry players expect the car leasing segment to grow here and become an important part of the auto industry.

Think One Automobile has been operating for two decades but its leasing unit was only started in 2011.

In just two years, the unit has grown to account for one-fifth of total sales revenue.

Since the car loan curbs kicked in around the middle of this year, the company said customer enquiries jumped 20 per cent from a year earlier.

Think One Leasing General Manager Thomas Lim said: "The buyer will have to come up with a higher share of the downpayment which is not easy for them so most of them tend to switch to leasing."

Think One's leasing business is largely centred on commercial vehicles.

The greater emphasis on leasing is also felt in other quarters.

Luxury car maker Daimler expects the number of Mercedes Benz cars financed and leased in Africa and Asia Pacific to jump 500 per cent from 180,000 in 2011 to 1.1 million in 2020.

Daimler Financial Services (Africa and Asia Pacific) President and CEO Richard Howard said: "We haven't seen any drop in business related to the new regulations. If anything, we've brought new products to the market, such as leasing for our customers, to give them a broader choice of the products we can offer them today, to enable them to purchase or lease a Mercedes Benz car.

"In addition to that, we continue to develop our fleet management business here in Singapore, so overall, our business remains strong," said Mr Howard who was speaking at a dialogue session at NUS Business School.

Daimler already finances and leases more than half of Mercedes Benz cars sold in Singapore.

As the car leasing and financing becomes more important in the auto industry, Daimler has been contemplating setting up a bank in Asia.

It already has a Mercedes Benz bank in Germany with a banking licence since 2002.

Mr Howard said: "Here in Asia, we've been looking quite deeply into the Hong Kong question - should we move to Hong Kong, should we buy a bank in Hong Kong? What would be the right route for us?

"We could extend the German bank and have a branch in Asia. It does make a lot of sense, actually, in the medium term, to become a bank in Asia. I think the brand - Mercedes Benz Bank could have a good position here in the market."

Meanwhile, with tweaks to the COE system only taking effect next February, leasing firms said potential car buyers will be watching to see where COE prices are headed before they decide whether to lease or to buy.

Mr Lim said: "It (COE prices) will drop, but I believe it's moderate. Now if it's (a) moderate (drop), the car will still be expensive so leasing will be an outlet for these buyers."

Last September, the government set new rules limiting cars belonging to Category A to 130bhp (brake horse power) of engine power.

The category is intended for mass-market car buyers and sellers.


http://www.channelnewsasia.com/news/business/singapore/car-leasing-business/835866.html