Impact of Defaults and Fleet Sales on COE Prices and Used-Car Market and Measures to Control Problematic Financing Practices in Coordination with MAS

Written Reply to Parliamentary Question

Ms He Ting Ru asked the Acting Minister for Transport in light of reports of high debt levels in the car-leasing sector

a.          what stress-testing has been done on the impact of defaults or fleet sales on COE prices and the used-car market; and

b.          whether, in coordination with MAS, steps will be taken to curb in-house financing or over-trade practices that circumvent loan-to-value limits.

Reply by Acting Minister for Transport Jeffrey Siow:

1.          Private hire cars account for around 15% of the car population, and the five largest car-leasing companies own around 3%. The remaining private hire cars are owned by smaller car-leasing companies and individuals. Defaults or fleet sales are unlikely to have a significant effect on COE prices or the used car market over the long term.

2.          Motor vehicle loans granted by financial institutions must abide by the Monetary Authority of Singapore’s (MAS's) motor vehicle financing restrictions. Alternative financing arrangements extended by car dealers are not regulated by the MAS. Buyers are strongly advised to obtain loans through regulated arrangements. The Government is monitoring the situation and will tighten regulations to manage the abuse of such regulations if necessary.