With the continuous rise in Certificate of Entitlement (COE) prices, even the most affordable car models are becoming less accessible to consumers in Singapore. As COE premiums keep breaking records at every bidding round, the future appears challenging for car dealers, especially with anticipated regulatory changes in vehicle emissions from the Land Transport Authority (LTA). To manage their inventory ahead of these changes, some dealers are resorting to significant price markdowns, sometimes as high as 15% from the original recommended retail prices.

Dealers project that mainstream car prices could increase by at least S$10,000 next year due to rising COE costs and new emissions regulations. While attempting to balance sales against these price hikes, many dealers may find themselves operating with slim or negative profit margins.

Automobile industry consultant Say Kwee Neng warns that some smaller car models might incur losses after factoring in operating costs. Dealers may need to rely on other revenue streams, such as after-sales services and parts sales, to offset these losses.

Here’s a look at five mass-market models presented at a recent car expo, highlighting their thin profit margins:

Citroen C4 Feel

Advertised Price: S$143,999 with COE
Recommended Retail Price: S$150,999
Gross Margin: S$5,262 (3.79% with COE from second bidding round)
Kia Cerato SX

Advertised Price: S$148,999 with COE
Recommended Retail Price: S$150,999
Gross Margin: S$12,994 (9.55% with COE from second bidding round)
Mazda 3 1.5 Classic

Advertised Price: S$146,999 with COE
Recommended Retail Price: S$172,888
Gross Margin: S$15,643 (13.43% with COE from second bidding round)
Suzuki Swift 1.2

Advertised Price: S$136,888 with COE
Recommended Retail Price: S$136,888
Gross Margin: S$8,904 (6.96% with COE from second bidding round)
Peugeot 3008 1.2 eat8 Active Premium

Advertised Price: S$173,000 with COE
Recommended Retail Price: S$178,888
Gross Margin: S$6,953 (4.19% with COE from second bidding round)
As the market continues to evolve with fluctuating prices and strict regulations, car dealers in Singapore face an uphill battle to maintain sales without sacrificing profitability.