Premium and Luxury Cars in Singapore

2020 IMPACT

Pandemic negatively impacts value sales of premium and luxury cars

Towards the end of the review period, the demand for premium and luxury cars had been growing gradually due to the greater desire to display one’s social status and wealth in Singapore. Despite a higher rate of Certificate of Entitlement (COE) compared to developed countries such as the US and Europe, the supply of these certificates has gradually reduced; supply follows a 10-year cyclical vehicle population trend, where each COE is valid for 10 years with owners having the option of renewal before expiry.

Luxury electric vehicles continue to penetrate Singapore, while SUVs maintain popularity

Luxury electric cars continued to arrive in Singapore towards the end of the review period, mainly due to higher demand and partly due to the wider goal of making the country’s land transport system more environmentally sustainable. The latter is part of the Land Transport Master Plan 2040 which sees the use of electric vehicles as the heart of this strategy.

Mercedes-Benz and BMW to retain leading positions despite significant drop in sales due to pandemic

Mercedes-Benz (Daimler South East Asia Pte Ltd) and BMW (Performance Motors Ltd for Bayerische Motoren Werke AG) remained notable leading brands within premium and luxury cars in Singapore at the end of the review period, holding double-digit value share prior to the pandemic, placing them at some distance from their closest competitors Audi, Porsche and Jaguar.

RECOVERY AND OPPORTUNITIES

Strong decline in COE costs could stimulate demand for luxury cars

With the emergence of the pandemic resulting in declines across much of the car industry, an increasing number of consumers cancelled orders until the situation became more stable. Therefore, COE prices witnessed a strong decline in 2020 compared to the previous year with this trend expected to continue mainly due to economic recession.

Emerging health and safety features within cars in the wake of the pandemic

Beside managing operational costs such as reducing the workforce or the temporary closure of manufacturing plants, it is also important for players to address a customer’s needs, and maintain interest and demand by further developing strategies, especially during an unstable period heading into 2021. With the virus remaining in circulation, emerging health and safety features have been implemented to address key areas of concern for consumers.

Greater consumer acceptance as network of charging points increases likely to drive greater demand for electric cars over forecast period

Despite increasing interest in luxury electric vehicles in Singapore, the number of consumers who own a car of this type contributed only a small proportion of total automobile sales in the country at the end of the review period. This is traditionally linked to consumer concerns regarding the lifespan of these vehicles, the warranty of the car battery, and the availability of public charging points.