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