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The new car dealers are making a killing - >100% margin

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PNGMK
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The new car dealers are making a killing - >100% margin

Postby PNGMK » Fri, 03 Oct 2014 8:26 pm

I'm writing a paper for something and as part of it I've been breaking down new car costs here...

Case in point - Toyota Corolla

Item Corolla SGD
COE $62000
CEVS $-5000
OMV $18700
PARF $18690

Total COG $94390
Profit $27498
Final Price $121888
Profit Margin 147%

If I take the price of the same car in Australia (off the lot) - and add PARF/COE/CEVS... I end up with a final price of SGD98,500. That's already including the Australian dealers profit margin!

So next time you hear people whining about the price of cars here... it's not just the duties (PARF) and COE - it's also the dealers running a real scam here and hiding their escalating profit marins under the umbrella of the ever rising COE and PARF (did you know PARF jumped dramatically last March?), as well as the tight supply making it a sellers market. No wonder the parallel importers keep bashing them - there's good money in it.

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Postby Strong Eagle » Fri, 03 Oct 2014 9:12 pm


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Postby PNGMK » Fri, 03 Oct 2014 9:27 pm

ARF (PARF) doesn't account for it. A corolla with an OMV < 20k has an ARF of 100%. There's still a bloody big hole to fill!

I did miss the 20% of OMV excise tho.

Item Corolla SGD
COE 62000
CEVS-5000
OMV 18700
PARF 18690
Excise 3740

Total COG $98130
Profit $23758
Final Price $121888
Profit Margin 127%

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Postby Strong Eagle » Fri, 03 Oct 2014 10:01 pm

I'm not disagreeing with you at all, PNGMK. In fact, I think it is the new car dealers that are also responsible for the giant hikes in COE prices.

Who bids for COE's? Technically, the car owner owns the COE but who is actually making the bid? Seems to me that car dealers don't care what the COE is... they just need to ensure their customer gets one in order to buy that new car.

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Postby Wd40 » Fri, 03 Oct 2014 10:35 pm

PNGMK wrote:ARF (PARF) doesn't account for it. A corolla with an OMV < 20k has an ARF of 100%. There's still a bloody big hole to fill!

I did miss the 20% of OMV excise tho.

Item Corolla SGD
COE 62000
CEVS-5000
OMV 18700
PARF 18690
Excise 3740

Total COG $98130
Profit $23758
Final Price $121888
Profit Margin 127%


You are talking about return on investment. Profit margin = net income/total sales. It can never be > 100%.

Also, you are using Australian sale price as your base. Australian dealers do much higher volumes. How many cars does a Singapore dealer sell in a month? They need to keep those margins per car for it to make sense.

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Re: The new car dealers are making a killing - >100% marg

Postby JR8 » Fri, 03 Oct 2014 10:56 pm

PNGMK wrote:COE $62000
CEVS $-5000
OMV $18700
PARF $18690

Total COG $94390
Profit $27498
Final Price $121888
Profit Margin 147%


Sorry but how do you derive 147% 'profit'? I can't make head nor tale of that.

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Re: The new car dealers are making a killing - >100% marg

Postby PNGMK » Fri, 03 Oct 2014 11:46 pm

JR8 wrote:
PNGMK wrote:COE $62000
CEVS $-5000
OMV $18700
PARF $18690

Total COG $94390
Profit $27498
Final Price $121888
Profit Margin 147%


Sorry but how do you derive 147% 'profit'? I can't make head nor tale of that.


Should have been 147% markup. I just calculated Profit/OMV.... to get a markup.

OMV is supposedly the price (invoice value) of the vehicle at the time of import. If you look at the Australian price you can see they probably make about a 50% margin (100% markup) but I don't know all the costs (possible GST and transport) so it's probably closer to 40%.

Either way... there's a lot of 'gap' between the Singapore final price and the Australia final price even taking all the duties and COE into account.

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Re: The new car dealers are making a killing - >100% margin

Postby earthfriendly » Fri, 12 Dec 2014 8:53 am

How much do the car dealers pay in rent? Show room cars take up quite a bit of space. For cities with high density (Manhattan, HK, Singapore), one of the major cost of doing biz is the rental of real estate.

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Re: The new car dealers are making a killing - >100% margin

Postby PNGMK » Fri, 12 Dec 2014 9:22 am

earthfriendly wrote:How much do the car dealers pay in rent? Show room cars take up quite a bit of space. For cities with high density (Manhattan, HK, Singapore), one of the major cost of doing biz is the rental of real estate.


This is an issue for sure... some of the dealers are definitely shrinking their premises and this cost has hit some parallel importers as well.
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Re: RE:

Postby ngwellyn1994 » Tue, 18 Aug 2015 8:17 am

Wd40 wrote:
PNGMK wrote:ARF (PARF) doesn't account for it. A corolla with an OMV &lt; 20k has an ARF of 100%. There's still a bloody big hole to fill!

I did miss the 20% of OMV excise tho.

Item Corolla SGD
COE 62000
CEVS-5000
OMV 18700
PARF 18690
Excise 3740

Total COG $98130
Profit $23758
Final Price $121888
Profit Margin 127%


You are talking about return on investment. Profit margin = net income/total sales. It can never be &gt; 100%.

Also, you are using Australian sale price as your base. Australian dealers do much higher volumes. How many cars does a Singapore dealer sell in a month? They need to keep those margins per car for it to make sense.

The volume of cars sold by Singapore dealer is certainly not small especially for established brands.

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Postby zzm9980 » Tue, 18 Aug 2015 10:30 am

ngwellyn1994 wrote:The volume of cars sold by Singapore dealer is certainly not small especially for established brands.


Compared to what? There are about 500k private cars in Singapore. We have less car per capita than NYC, London, or Tokyo. Assuming 1/10th cycle per year (which they don't), then that is 50k car sales per year. That is peanuts compared to nearly every other first-world market.

https://www.lta.gov.sg/content/dam/ltaw ... 202014.pdf

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Re: The new car dealers are making a killing - >100% margin

Postby Strong Eagle » Tue, 18 Aug 2015 10:42 am

^^^^^^^^^^^^^^^^^

+1. It's low volume combined with exorbitant real estate prices that drives the cost of new cars through the roof.

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Re: The new car dealers are making a killing - >100% margin

Postby bgd » Tue, 18 Aug 2015 11:50 am

Strong Eagle wrote:^^^^^^^^^^^^^^^^^

+1. It's low volume combined with exorbitant real estate prices that drives the cost of new cars through the roof.


+ the COE.

I once commented that $50K for a bike (the BMW 6 cylinder, model escapes me) was a lot. The owner's comment, "Not even the cost of the COE for a car." That was a very good point.

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Re: The new car dealers are making a killing - >100% margin

Postby ScoobyDoes » Thu, 20 Aug 2015 9:49 am

The good thing about SG is pricing is completely open, both for purchase and sale/scrap. I know, roughly, how much I get back from my car 6yrs, 4mnths and 3days down the line!

Government even has a full price list to download from OneMotoring. Since we've been taking the Corolla as an example;

OMV; 19,589
GST&Excise; 5,563
ARF; 19,589
Reg.; 140
COE; 58,700 (based on early July..... today higher)
COST = 103,581
SALES = 121,888
DIFF = 18,307

Margin: 18,307/103,581 = 17.7%

Whilst "profit" is 18,307 compared to OMV of 19,589 (93.5%) this 18,307 doesn't include Toyota's discounting, extras put in the car after arrival in SG (many cars don't come with proper wheels, leather seats etc. and are fitted locally). Then, yes, there are showroom and workshop rents to pay, salaries to pay, and storage fees which for some cars can be 6-months or more - my friend's Passat had been in stock for about this period, for example. Jaguar have had XF units in stock even longer and on raw figures their margin is 14% before discounting.

Given government and fixed costs, I have to say I'm okay with dealers earning 10-15%. The problem I have in comparison is with C&C, for example, that have a raw margin of almost 30% for their C200 because it sells so well.
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