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Car dealers shifting gears to promote greener models to buyers, but say there’s still room to grow

SINGAPORE — Car buyers can expect to see a healthy supply of cleaner and greener cars coming into showrooms, with motor dealers here riding on the rebates offered to motorists under the Vehicular Emissions Scheme (VES).

VES, which replaced the previous CEVS in January last year, was meant to encourage motorists to buy environment-friendly models.

VES, which replaced the previous CEVS in January last year, was meant to encourage motorists to buy environment-friendly models.

SINGAPORE — Car buyers can expect to see a healthy supply of cleaner and greener cars coming into showrooms, with motor dealers here riding on the rebates offered to motorists under the Vehicular Emissions Scheme (VES).

At least one dealer here said that he has brought in two more “cleaner” models of cars since the scheme, which aims to encourage buyers to choose cars with lower emissions of pollutants, was implemented last year.

The National Environment Agency (NEA) and the Land Transport Authority (LTA) announced on Wednesday (Oct 30) that they were extending the scheme to the end of next year to encourage the purchase of “cleaner car models”. It was originally supposed to run until Dec 31 this year.

Still, some car dealers acknowledged that there remains a small segment of buyers who want high-end cars despite the higher cost of such premium models.

HOW THE SCHEME WORKS

VES, which replaced the previous Carbon Emissions-Based Vehicle Scheme (CEVS) in January last year, was meant to encourage motorists to buy environment-friendly models.

The authorities assess vehicles on five pollutants, namely carbon dioxide, hydrocarbons, carbon monoxide, nitrogen oxides and particulate matter. They are then categorised into five bands.

Those who buy cars that fall into the “cleaner” bands of A1 and A2 will get S$20,000 and S$10,000 rebates respectively. The rebates are to be used to offset the car’s Additional Registration Fee.

Cars that have higher emissions of pollutants fall into bands C1 and C2, and they come with a surcharge of S$10,000 and S$20,000 respectively.

Cars that fall into band B are not subject to any rebate or surcharge.

In an update on Wednesday, LTA and NEA said that the scheme has been effective so far.

Between July last year and June this year, the number of new cars registered in the Certificate of Entitlement (COE) categories A and B that qualify for rebates under VES bands A1 and A2 has “collectively increased by about 60 per cent”, they said.

COE category A are for small cars with engine capacity up to 1,600cc and engine power output of 97kW, while category B is for bigger cars (above 1,600cc or 97kW).

Conversely, the number of new cars subject to surcharges under bands C1 and C2 has collectively fallen by about 14 per cent.

Of the 39,735 cars that were registered in COE categories A and B, slightly more than a quarter (about 10,700) qualified for the VES rebates during the first half of this year. And for the cars that qualified for the rebates, 1 per cent was under the A1 band while 26 per cent was under the A2 band.

MOVING TOWARDS CLEANER CARS

Mr Ron Lim, the head of sales and marketing at Nissan agent Tan Chong Motor, told TODAY that since the announcement of VES, his company has targeted to make sure that all new models launched get a “B or better” banding.

For instance, the electric Nissan Leaf and Nissan Serena e-Power launched this year were banded A1 and A2 respectively. The other model under the A2 band is the Nissan Note.

The company aims to “fully electrify” its line-up by 2022, he said. This means that the models will either be fully electric or have the “e-Power powertrain”, where the car is 100 per cent driven by an electric motor but will not require plug-in charging.

While Mr Lim declined to reveal his sales figures, he said that the Serena e-Power, which falls under the A2 band, is his company’s bestselling model right now.

Similarly, Mr Neo Tiam Ting, director of Think One Group which provides new commercial and parallel imported vehicles, said that since VES kicked in, his company has been bringing in cleaner cars under bands A and B, although he was unable to give the exact numbers.

Mr Neo said that he had reduced the number of cars under the C band because there were fewer takers with the surcharge imposed. For instance, the Suzuki sports utility vehicle Jimny used to sell well before VES was introduced, but they had few takers after that because it was banded C, which comes with a surcharge of S$20,000. 

“If you don’t bring in cleaner cars, you will have to pay a penalty. Then the car price becomes higher and it becomes difficult to sell,” Mr Neo said.

Other dealers also agreed that customers, especially those in the middle- or lower-income group, are sensitive to car prices.

Mr Raymond Tang, the managing director of Yong Lee Seng Motor, said that while potential buyers look at the price of the car and not its level of emissions, they would consider getting cleaner cars since the rebates help to bring down prices.

Mr Tang, who declined to reveal the banding of cars in his inventory and the number of customers who were buying cars from the “cleaner” bands, said that from his observations, the majority of his customers were price-conscious especially now that the economy is not doing well.

That said, there is still a small group who is not concerned about car prices.

For those looking to buy premium cars which can cost more than S$200,000, the surcharge imposed under VES is only “a small percentage”, Mr Neo of Think One disclosed.

For instance, a high-end car which cost S$300,000 but fell within the C band will attract a S$20,000 surcharge. This is about 7 per cent of the total cost.

In comparison, a cheaper car of about S$80,000 in the C2 band will attract a surcharge that is a quarter of its cost.

Mr Jerald Tan, a sales consultant at Volvo Cars Singapore, said that for such customers, “branding, the size of the car and the status that it’ll be able to give them” is more important than the variant of the car. These customers are usually professionals, managers, executives and technicians in their 40s and 50s, who could afford such cars because they are in commanding higher pay.

On how to encourage such customers to adopt lower-emission cars, Mr Neo said that they may consider buying hybrid luxury cars. Such cars, though more expensive, would also give consumers “a little bit more savings” if they qualified for rebates. However, Mr Neo said that while such cars are already in the market, they would have to improve in technology first to attract this segment of customers.

GIVE MORE TIME FOR MARKET TO ADJUST

While dealers here welcome the move to extend VES until end-2020, some would like even more time for the industry to adjust to the scheme.

Both LTA and NEA said on Wednesday that the scheme will be reviewed regularly, taking into consideration its impact on motorists’ purchasing decisions and advances in vehicle technology.

Mr Lim of Tan Chong Motor said that it will be good if the criteria for the scheme remain unchanged for a longer period of time, such as until the end of 2021, with at least two years advanced notice to the industry before any changes take effect.

Related topics

vehicles transport carbon emissions cars NEA LTA rebate VES

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