This is AC N A podcast. Welcome to a brand new season of Money Talks. I'm your host, Andrea. He, we're kicking things off with a new series called This or that. And this is where I give my guest two options and we weigh the pros and cons. And in today's debut episode, we're talking about cars. So my dad owned a car for a little over three decades. The last car he owned, it
was falling apart. But the real reason he decided to quit car ownership altogether, it's not hard to guess it was the killer C O E. Now, I know everyone knows this or at least they should. But Singapore is quite special when it comes to car ownership. Even before you buy one, you need to pay for a piece of paper that says you can own one otherwise known as the certificate of entitlement or C O E. And it's valid for
10 years. Now, at the last round of bidding, this piece of paper costs between nine $26,000 and 100 and $19,000 depending on the car size. So, like my dad, many people have now been priced out of owning cars. But this also means drivers will flock to car sharing and rentals. And this therefore pushes these firms to acquire more cars and thus keeping those C O E prices high, will most of us never own cars again? And if we really need one is leasing, perhaps a better
to option, buckle up. As I put this question to my guest, Julian General Manager of S G K Mart, an online car marketplace for new and used cars. Hey, Julian, welcome to Money Talks. As an introduction to our listeners. Please tell us what car do you drive? When did you get it? How much did you pay for it?
So I recently switched cars, I think a year ago, maybe even a couple of years ago, I'm currently driving a Toyota Crown. That's old school. I used to drive a civic type R, I love that car also, old school.
It's a driving school. They call
it, but I had to, I had to let it go and get the bigger one. So I'm driving a Toyota Crown now. I must have paid 97 98,000 for it, I think.
Ok. And how much was the C O E on that? I
think the C O E on that at the time was about 50 ish grand.
Well, that number is completely now.
I know, I know God knows when we will ever see that number again. I'm going
to ask you about your future decision in just a bit. I'll save that for later. Would you ever consider giving up your car though?
I really, yeah, in a heartbeat, in a heartbeat,
I will. Ok. Why? After driving for so many years, um, and enjoying, of course, those low C O E prices, what makes you think you are able to survive with that one? Um,
first and foremost, I will give up because it's expensive, it's really expensive to own a car in Singapore. I mean, just road tax insurance, the parking, occasional fines, right? I mean, er, p petrol prices going off the roof. This is really the main reason why I'll stop driving. The other reason is because I think Singapore has one of the best public transportations in the world. I mean, if you travel enough, you will realize that Singapore is
really efficient. Of course, we are probably not as efficient as Japan, for instance, you know, maybe our train services, it may not be as good as say, maybe Hong Kong, but I think we are definitely up there with the best.
I agree. I've traveled quite a fair bit in the big cities like London, New York where you think there would be the best metropolitan transportation system. Singapore outshines those two cities, in my opinion, at least. But yes, if you're going to compare us to Japan and Hong Kong, that's a different story. Although I don't think we're far behind. So what's going to be your commute without the car train?
I guess I'm living near a train station, so that's fine. That'll work. The only thing why I can't let go of a car now is I've got to send the kids to school and that's really a pain in all honesty. I've actually tried it several times. So during COVID, when we were all in lockdown, I would actually take the train instead of driving them to school. So I'll carry the bags and stuff. I'll bring them to the station and it felt good. It felt like, yeah, you know, I could live with this. Right?
And you do that for a couple of months and you realize, you know, it's going to get a bit tiring because it's only a home to school and school to home because we are all working from home. Right. But now it will be home to school, school to office. So that's a different thing. And obviously I won't be in, you know, shirt pants and stuff, but I believe very
strongly that we can adapt. Right. So my wife was saying, but, you know, if you have a car, we can go from point A to BC and then back home and I told her, you know, if we don't have a car, we'll just go point A B and then back home, we'll live point C tomorrow next week.
I think it's about managing your route and managing your time as well? Ok. So the reason we're here obviously is to talk about those eye popping C O E prices. Is there some kind of psychological seeding like say category A which is for cars up to 1600 cc, right? It's at 96 now. So will it hit that 100 K psychology ceiling and then come down, how do you think this is going to pan out? I think the
C O E is really all about supply and demand. So I can't say that there will be a psychological ceiling, but history has shown that prices have reached its peak before decreasing. I mean, it could be because of consumer preferences, economic conditions. So for instance, during COVID-19 pandemic C O E prices did a fair bit because of the lack of demand. So I don't think there's a psychological barrier to it, although I do strongly believe it will hit the 100
grand very soon because cars at Expo is coming. I'm sure it will drive the prices up. Indeed.
So my dad owned a car for a little over three decades and then he gave it up because of C O E. He really couldn't afford it anymore and it wasn't as if we were driving a brand new car, it was second hand car. He did it for the family. Same like you. But now his kids have moved out married off. I don't need the car anymore. So I introduced him to car sharing. So I used it first. I experimented with it and I taught them
rest of my family members to use it. So what do you think needs to happen for more people to give up their cars and perhaps take the alternative route? Be it public transport or car sharing or car leasing? Even which we'll get into later.
Prices need to go up higher C O E prices need to go up higher. So
that 100 K C needs to be there.
Yeah. Yeah, I strongly believe so. I'm not for high prices obviously, but I'm all for C O E. And I say this because the C O E system has done a very good job in controlling car population in Singapore. That's its main purpose and I think it certainly ticked the box very accurately, very efficiently. However, the problem in Singapore is that car ownership has got a lot to do with status symbol. It has got a lot to do with convenience as well as comfort, right? People buy cars because it's a
desirable thing, man. If I drive a Mercedes E class, people will think that, oh my goodness, he's made it in life. That
was exactly my dad's car. It was aspirational. Like my goal is to own that Mercedes E class.
Yeah. So that's how it has always been. And of course of late, the youngsters will always be like, you know what I want comfort I want security. I want some privacy which obviously public transportation can't provide. And then of course, in time of COVID, they'll say, you know what? I don't want to take public transportation because I don't want to risk getting COVID. So I want to have my own car now that
we are living with COVID. I reckon apart from price, people will need to realize just how expensive it is to own a car. So you could probably buy a car with AC O E maybe costing you $2 maybe you'll buy the car for $30,000. That's your upfront payment. Let's just say you pay half of that 15,000, which isn't a lot to own a car in today's context. Right? But your maintenance could be really,
really high. I mean, you have your depreciation, you have your road tax, you have your insurance, which is an annual payment, by the way, you have parking, your occasional summons, right? Your petrol prices, your er P S, it's constant payment. If you put all of that together, we are talking about a good 1002 2005 every month just to own a car. If you put that into perspective, think about it. Right. If you take grab every day, are you really gonna hit 1,002,005?
Even with search pricing? Right. Exactly.
Unless you're telling me you're doing sales then. Yes. Ok. I can understand. You got to run from point to point, I can understand you might even hit 2000. Maybe getting a car would be a better option for you. But I mean, and I say this with a lot of confidence because I did it before. It was like an experiment because I wanted to show my wife that, you know what? I think getting a car is a wrong move. I think we should not get a car. Let's just go public wherever we want to go, we need,
need to go. Let's take a taxi. I call a grab or something.
You know, if you really need that comfort and the space to ferry
everyone. Exactly. And we tried that for a good 30 days and we realized how much money we can actually save and trust me when I sold my previous car, when I got back, that lump sum of money. Yeah, all I did. I immediately called my wife and said, you know what? I think we shouldn't get the car. We should just keep this money. I mean, put it aside, do whatever we want. We could buy stuff for the kids to bring them for holiday. You know, and she just went. No, you know what?
It's impossible. It's genuinely impossible,
especially if you're very used to it for a specific purpose. I know of people who own cars specifically because they are the sole caregivers of their elderly parents. For example, family members with disabilities and taking a cab. It's not the most logistically comfortable situation. If you're used to a certain level of comfort for a specific purpose, maybe when the kids are older, they're more independent.
I can't wait. I can't wait, man. Every
parent is telling me this. Hi. My name is Julie Yu and I'm the host of the Climate Conversations. Each week I speak to guests who give us tips on how we can protect the earth. Every once in a while. We also have interesting stories like how Singapore's first Tesla owner prompted billionaire Elon Musk to reach out to Prime Minister Lee Slo or a chef who makes the juiciest burgers from only
plant based ingredients. For more stories like these, look for the climate conversations on our C N A and me listen apps or wherever you get your podcasts. So the other option apart from car sharing is leasing a car, which is what some of those people I spoke to who drive a car to ferry certain family members around. They are doing just that. Can you walk us through the pros and cons of leasing a car? And how is that different from actually renting a car?
Ok. So if you get a car from a car leasing company, it's usually for a longer period of time, an extended period of time. So you're not going to lease a for three days, for instance, for whatever Chinese New Year, you'll probably do it because you want to try car ownership for a while. So it's probably six months minimum, up to a year. The advantages of going through car leasing is that you don't have to fork out that
one lump sum of down payment. So you just go up to a company and say, you know what I want to lease this car and they'll say, ok, your monthly payment is X amount of dollars, everything is covered, road tax insurance, everything. However, you don't own that car, which means to say you can't modify that car. You can't just say, oh, you know what? I don't really like this champagne color. I want it black. I would like to have it resprayed. No, you can't do
that either. You can't even have it wrapped because it ain't yours. Exactly that. So you don't have that ownership. Is that really important though? I know it's not in line with the business that I represent, but I feel there's a need to be honest and pragmatic. Yes. And I think car ownership in Singapore is just a no goal if you don't need a car. And I think a lot of people can't draw the line between a one and a need, I want a car, I want a Ferrari, right? But I can't, I mean, I
don't really need a Ferrari. Arguably people would say that someone with three kids may not even need a car. Right? So it's really up to individual. But if you ask me car leasing is a much better option compared to car buying because will it save
you more in the long run?
Do you think? I don't reckon save you more in the long run financially, but I think it saves you a lot of trouble. It gives you an experience. So you get a car and you sort of realize like, oh, man, I mean, I've got to consider parking, I've got to consider patrol. I'm starting to feel like it's eating into my savings or it's eating inside my bank account. Is this really for me?
And we never want this to happen to anybody. But once in a while you get into minor accidents and then you have to send the car for repair the hassle, the mental stress, it be like, oh man, I got to do this, I got to do that, but I have to be in the office. It's a lot of things to really seriously consider. Do you
see then a trend of people moving towards leasing because of the high C O E s. Do you see that wave of people just being pushed towards these alternative options?
I think it's a bit of both. I see it as a funnel. You know, it's like a funnel sort of model at the top. You have people leasing, renting, buying, borrowing, what have you and you slow down the ultimate goal of Singaporeans. And I say Singaporeans because I'm a Singaporean, the ultimate goal is owning that car, that E class or the five series or the F type, whatever. Right. So that's the ultimate funnel right at the bottom is just, I want to own a car, they do whatever it takes to get there.
But those who can't, will start thinking about leasing will start to think about renting car sharing even. Will more people go towards that? I think. Yes and no, because it's an inevitable thing to some. I don't want to lease a car. I only want to own a car no matter how much it takes in general, say I have $10 in my wallet. I'm willing to take $10 and I'm willing to do $5 on credit just to get to the end of the funnel. It's not advisable, obviously financially, but I do think more
people would think about leasing. I also do know quite a handful of people who will hold on to their cars till the end of the C O E life span and they'll just renew the C O E again.
But at 90 6 to 100 and 19 K, that's a very expensive piece of paper just to keep that car. And you're not even sure if that car is going to run as smoothly as it used to for the next 10 years. Well, I think
only the owner will know because how often he has been servicing how much he babied the car would actually be a good gauge for him. And if you think about it, let's just say a for instance, right. C A is approximately 96. Let's just say it's 100,000. If I renew my car, based on that number, my annual depreciation would be 10,000 year, which is still
cheaper compared to current prices of new cars. If I know that I've been babying my car, I've been really taking good care of my car servicing regularly
and if it's a car where you can get spare parts easily.
Yes, exactly. That I would actually spend 100,000 renewing. Yes. Yeah,
because you're effectively paying 100,000 more just for the car ownership and to
run it and for the next 10 years. So if anything happens, I will still be able to sell the car and as you can. But for instance, and if no one wants to buy the car, I'll still be able to scrap my car, say maybe the third or fourth year and get back the remaining value of the C O E that I've
paid. So it's about usage then. Yes, it is also about usage. What's the demographic like of someone who would lease a car apart from those who would want to try out car ownership for a while?
I mean, if you exclude those who want to try out car ownership and you exclude those who just want to impress their friends and their girlfriends, it will probably be maybe 50 to 60 year olds. And I say that because my dad is now, what, 72. And he told me once that, you know what I want to stop driving when I'm 65 which he did, he did stop driving at 65. But I kind of realized that between the age of 60 to 65 your reaction time isn't as good anymore. You're slightly slower. You
are grumpier on the road. So I think it's good. 50 to 60 years old, right? Yeah.
Ok. That's an interesting subset there. So let's say we're looking at a period of five years. Would it be more expensive to buy or lease a car? Keeping in mind? Of course, all those wonderful things that bleed our wallets, maintenance, insurance, road tax,
the like as in five years, as a brand new car or five years, used car. Uh, let's go with used first. I would say you should just go with a five year old used car. I mean, if you just want to try it out for five years and five years is not a short time, five years is a relatively long. But if you are confident, maybe you have tried certain models before and you really like it. I say you should just go for the used car because it's the final thing, you know, at the end of it, I
want to be an owner to a car. May not be an E class may not be a five series, but I would like to own a car. I would like the car to be under my name. So at the end of it, I think if it's a five year thing, you know, you could consider getting an economic car, I could say. What
about a five year new car versus leasing there? Oh, man,
definitely, definitely leasing because new car prices are crazy today. It's not worth the money. It's not worth the financial stress unless
of course you can really
afford it. Yeah. But you see, that's my argument. Right. I mean, I told a friend just because you're well to do does not mean that you should spend so much on a liability.
Yeah, it depreciates the moment it's out of the showroom.
Exactly. And what's worse is we came from a time when cars weren't this expensive. So, if I say, for instance, a Suzuki, if we knew what it cost 10 years ago, and now you're telling me this is the price. No way. I mean, yeah, even if you've got the money to spend it's in your banks. There are doing absolutely nothing. Does not mean that you should just splurge like this. That's
me. And on that note, what's your financial advice to a potential car buyer in terms of what to look out for?
You should always consider all the maintenance cost of owning a car. So, like what I mentioned before, regular maintenance, servicing petrol insurance, road tax. But more importantly, you should also think about your financing options, which financing options suit you in your current financial status. That would actually not rock the boat too much
a car is convenient, especially when you have Children. But increasingly the cost is far outpacing the benefits of owning one with some of the best public transport networks and different leasing opportunities. It's become a lot easier for us to mix and match things up. That's it for this episode of this or that. Thanks Julian for helping us weigh the pros and cons of buying versus leasing a car
any time. Thank you
for having me. If you've enjoyed this episode of Money Talks, there's more content for you to enjoy. Simply follow us on Google Spotify or Apple Podcast. Give us five stars or leave a review. The team behind Money Talks is Joanne Chan, Jacqueline Chan, Wind Christina Robert and I'm Andrea Hing.