Future of Automobile Industry in Singapore Post COVID-19
Aaron Tan, founder and CEO of Carro, an automotive marketplace talks about the changing landscape
The novel coronavirus pandemic has hit many industrial sectors. One of the worst affected has been the automobile sector. Now, countries are recuperating and economies are stabilizing, and people have started making plans to buy cars.
For the last ten years, Singapore's economy subsisted a constant rise in a period of abundance that it hasn't encountered before. For illustration, the capital per grown-up rate increased by 5.6 per cent from mid-2017 to mid-2018, which gives birth to the number of millionaires and the super-wealthy residing in the country to increase by 11.5 per cent and additional 1.2 per cent, respectively. This surge in income is moreover signified by Singapore's residents sustaining more wealth growth in comparison to previous generations–leading to many Singaporeans believing they are now better off financially than they were five years ago and can live comfortably with more disposable income.
Yet, despite their growing spending power, what's typically been elusive for Singaporeans (even high-income earners) is car ownership, which–along with overall car sales–has dropped due to the costs associated with driving a car in the small city-state.
To discuss the after-effects of a pandemic on the automobile sector in Singapore, Entrepreneur APAC interviewed Aaron Tan. Tan established his introductory startup when he was just 13 and has retailed two firms before turning 21. He is presently the founder and CEO of Carro, an automotive marketplace. Before Carro, Tan devoted more than four years with southeast Asia's prominent investment fund, Singtel Innov8 Ventures.
In the interview, he told that as his company deals in used cars, people not buying new cars in the first place affected his business subsequently. The car manufacturers had to shut down their factories at the end of February. This in turn adversely deteriorated their sales of used cars. Their business was struck hard. But over time, the circumstances turned in their favour. People started to prefer personal vehicles to travel instead of public transport. The obvious reason was that everyone wanted to travel safe and prevent any chances of contracting any kind of virus.
When he was asked why people sell their cars, he replied that the prices of cars have increased by 15 per cent more than last year. So it you want to sell off a car you don't want to use right now. It's the perfect time for you to sell. Simultaneously, if you want to buy a car it is not an ideal time to buy.
Later on, he told how their pricing algorithm works. How they set the price of the used cars based on age, miles covered, condition of different parts of the car, etc.
Acquiring better experiences with cars
As the desire for amenity welfares is on the surge, Singapore has seen a decline in car possession over the years. This has occurred partially due to the restricted certificates of entitlement (CoEs) published by the administration, which is intended to manage congestion as well as to enhance environmental and metropolitan sustainability in view of growing affluence in the country. This implies that an automobile's price goes well beyond its purchasing tariff due to increased enrollment fees, street taxes and insurance–and that's not even tallying the monthly instalments when taking out a car loan.
Nonetheless, while public buying tendencies indicate that Singaporeans are evolving less price-sensitive, this is not the issue for cars. According to a YouGov Omnibus that looks into consumer patterns across Asia, higher-income wagers in Singapore were additional prevented by the expense of taking care and the car's devaluing value than those in the lower-income bracket. This alludes to the certainty that Singapore's wealthy aren't deterred by the high expense of the car itself—rather they don't want to devote to a long-term commitment that will only devalue over time.