Singapore Autos Report Q2 2010

The severe deterioration in sales volumes and new vehicle registrations in Singapore in 2009 exceeded expectations, especially given a fiscal stimulus package unveiled by Singapore's authorities and the offering of incentives by dealerships to clear stockpiled inventories. Total vehicle sales ended the year down 26.6%, led by a 34% drop in commercial vehicle sales. Sales of cars under 1.6-litres and taxis fell 24.6%, while sales of cars over 1.6-litres 30.7%. Based on this, BMI has revised its forecast for 2010, given the lower than expected base from 2009. Our revised forecast for new vehicle registrations in 2010 is for a rise of 5% y-o-y, to a total of 93,433 registrations.

Risks to our forecasts for 2010 are to both the upside and the downside. On the upside, a more rapid than expected global economic recovery would likely see new vehicle registrations rise in Singapore more quickly than the 3.2% y-o-y that we currently forecast. However, on the downside, if key economies around the world, particularly destinations for Singapore's exports, remain in recession next year, then it will be another year of recession for Singapore, which would likely translate into another year of falling new vehicle sales and registrations.

The market's decline is reflected in Singapore's 11th place in BMI's Business Environment Ratings for the automotive industry in Asia Pacific with a rating of 48.5 from a possible 100, despite an increase in its country structure score from 76.5 to 90.0. Singapore, along with Thailand, has the highest number of free trade agreements completed for any Asian market. However, in industry terms, the lack of domestic production facilities and the imposition of vehicle quotas which restrict potential sales growth weigh on the market's overall rating. Nevertheless, Singapore has climbed three places since our first ratings were produced.

In 2009, Toyota Motor, which includes the Lexus brand, continued its dominance of the overall market with a 25.49% share of new vehicle registrations. Toyota remains well ahead of Honda Motor, which sits in second place with a market share of 14%. Hyundai is in third place with 9.6%, while affiliate Kia is fourth with 6.24%, up from 4.8% in H109. Mercedes-Benz pipped Nissan Motor in the last two months of the year to take fifth.

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