Singapore car dealers -- profit margins don't make sense?

[mervynkoh]

Re: Singapore car dealers -- profit margins don't make sense?

Just look at the prices which PIs are offering yet the make a profit! What Pml makes is cream!

 

[DriveAllDay]

Re: Singapore car dealers -- profit margins don't make sense?

i think a bit hard to calculate like this.

it would make better sense, if youcan have a look at the total investment by a investor in US, and in Singapore, then work thru the ROI and you will realised that the ROI based on the environment in each country will be reflective on the margin.

I would assume (but i am not sure) that US would be a lower investment, lower margin, higher volume business. However, US generally trades on a higher spread for working capital, therefore their rate of returns will be higher than singapore.

On the other hand, in Singapore, it would be high investment, higher spread but low volume ( in the case of PML anyway). Although the credit spread is lower in Singapore, due to the larger capital size, the margin has to be high.

Not forgeting that Car business in Singapore has a cap on how much you can earn, unlike in the US. the maximum profit is limited by the number of COE Mr Raymond Lim decides to toss in the market.

Good points.

I don't buy the US is a much larger market theory
- Car retail, like all retail, is a highly local business
- Centralised sourcing has little impact on COGS here, since unlike Walmart, dealerships are usually small and cannot command significant bulk discounts
- Singapore is small, but PML's footprint / volume is larger than many US dealers

The COE being a cap on car business is unlikely true now, especially given the declining COE prices. This means that the supply and demand is roughly in balance.

I see this as a sign of an industry protected for too long, and have grown extremely inefficient. I am a little surprise that many of us sympathise and said " no choice what, their cost is high so they have to sell high". In any other industry, competition and costomer action would have forced radical changes to the busineses. Of course the entire vehicle tax policy introduce so many layers of convolutions, inefficiencies that transparency is almost all but impossible. That's where I think the dealers have taken advantage of.

I guess my whole point of writing this all too long note has been to raise an alert. Most of us here are informed buyers of extremely large ticket price items. As a group there are many things we can effect, from taking advantage of potential arbitrage opportunities to doing things differently (like self-import).

May we all get to drive the beloved cars we want.... peace.

 

[pfz]

Re: Singapore car dealers -- profit margins don't make sense?

Thanks for raising the topic & the analysis - found it quite informative and a good read to see the well thought out viewpoints. Most forumers have covered the ground so just a point to add : car dealers provide financing & if you self-import my understanding is that it might not be that easy unless paying in cold cash.

LTA does have procedures for importing cars (and a fellow forumer on the Volvo forum did some analysis on the cost saving - abt 100K on a 335 coupe)

VolvoSG Club • Login

Set up a cooperative anyone?

 

[DriveAllDay]

Re: Singapore car dealers -- profit margins don't make sense?

Thanks for raising the topic & the analysis - found it quite informative and a good read to see the well thought out viewpoints. Most forumers have covered the ground so just a point to add : car dealers provide financing & if you self-import my understanding is that it might not be that easy unless paying in cold cash.

LTA does have procedures for importing cars (and a fellow forumer on the Volvo forum did some analysis on the cost saving - abt 100K on a 335 coupe)

VolvoSG Club • Login

Set up a cooperative anyone?

Sounds like a plan ...

I only buy cars with cash ... two reasons:
- Financing charges are too high
- It forces me to buy only what I can afford, when I can afford

 

[golfgti]

Re: Singapore car dealers -- profit margins don't make sense?

Sounds like a plan ...

I only buy cars with cash ... two reasons:
- Financing charges are too high
- It forces me to buy only what I can afford, when I can afford

in that case i can only wait till abt 50-60 before i can afford an M3 in full cash, which may explain why there are so many white hair farts driving supercars, which explains why people think they look like old pervs lookin for young skin. I dont subscribe to that as recklessness is for young. Enjoy your youth while you still have it. I aint gonna turn up at Sepang when im 50 & lookin like ive got some 3/4 life crisis on hand

 

[DriveAllDay]

Re: Singapore car dealers -- profit margins don't make sense?

in that case i can only wait till abt 50-60 before i can afford an M3 in full cash, which may explain why there are so many white hair farts driving supercars, which explains why people think they look like old pervs lookin for young skin. I dont subscribe to that as recklessness is for young. Enjoy your youth while you still have it. I aint gonna turn up at Sepang when im 50 & lookin like ive got some 3/4 life crisis on hand

Well put

I bought my first car on 7 yr, 70% loan. Sold the car after 4+ yrs, and realised that the effective interest rate was (on monthly reducing basis, after deducting rule 78 interest penalties etc) almost 9%. That's when I realised that I will never invest well enough to yield 9% consistently over 4 yrs, and I should just use cash instead of taking a loan and investing the cash.

Am quite a few years away from mid-life crisis, so am not too afraid of looking like ah-peh looking for affirmation in a fast car