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The Price Of A BMW 335i In Singapore: USD $260,000

Tyler Durden's picture





 

All black market "arbitrageurs" listen up: it is time to stop selling bread in Zimbabwe and start importing beemers to Singapore. The reason: a baseline 3 Series BMW sells for $260,000 (US) in Singapore. Yes, that's more than a quarter of a million for a car that in the US leases for a few hundred a month. "Francis Goh sits in a bronze BMW 335i convertible in a Singapore showroom, waggling the wheel and feeling the leather. He isn’t fazed by the S$340,000 ($260,000) price tag, five times what the same car costs in the U.S. “I see the price of a BMW, to me it’s reasonable,” said Goh, adding that he may instead go for a Mercedes-Benz E200 or Audi A5 to replace his Subaru Impreza WRX." However, unlike pretty much everything else (and take a look at Cotton and Corn today to see our broad definition of "everything"), this particular price surge is not due to endless Fed liquidity. Or at least, not so much: buyers have the Chinese trillions in Renminbi loans and the Singapore economic miracle to thank for this one, as well as Singapore's unprecedented hatred of car ownership.

From Bloomberg:

Record economic growth in the city state is enabling buyers like Goh, a 34-year-old financial industry worker, to splash out on Bayerische Motoren Werke AG and Daimler AG autos even as a 24-fold jump in the cost of a car permit inflates costs. As the government cuts the number of new autos on sale, prices which are already among the highest globally look set to rise further.

Singapore has increased spending on public transport and reduced the number of new car licenses to rein in auto sales and curb pollution and congestion as the booming economy boosts the buying power of the country’s residents. Last year, Prime Minister Lee Hsien Loong promised to spend S$60 billion over 10 years to double the size of the subway network.

Car buyers in Singapore must pay for excise and registration duties of about 150 percent of the vehicle’s market value, as well as bid for a limited number of government permits, called certificates of entitlement, that allow a car on the road for 10 years. The cost of a permit alone would now buy a new Porsche Boxster in the U.S., or a C-Class Mercedes in Hong Kong, where curbside pollution rose to a record last year.

It appears that car sales in Singapore are very comparable to medallion purchases for New York taxi cabs:

The Ministry of Transport has cut the number of new-car permits it auctions twice a month, driving the price of the so- called open-category COE, which can be used for any size of car, to an average S$71,339 in January. That permit cost S$19,889 at the beginning of 2010 and as little as S$3,000 two years ago. Once the certificate expires, owners either have to bid for a new 10-year permit, export the car, or scrap it.

Yet no matter the reason, demand in this case appears to be perfectly inelastic.

“High customer disposable incomes” are spurring demand for cars in Singapore, said Vivek Vaidya, automotive and transportation director at researcher Frost & Sullivan. The reduction in permits “is bound to put the prices in upward spiral.”

Just like the new subprime in the US, i.e., deadbeats buying up Government Motors cars with government-funded loans, these prices are only sustainable due to massive crediting:

“If we stick to Japanese cars and the budget-constrained segment, we are not going to make money,” said Dennis Lim, owner of dealership Auto Equator, which sells brands such as Jaguar and Mercedes-Benz, as well as Isuzu. For high-end autos, “the extra S$20,000 to S$30,000 on the COE is nothing when the total car price is S$300,000 or more. They’re not so price- sensitive.”

Luxury car brands including Aston Martin, Porsche and Fiat SpA’s Ferrari saw sales surge as much as 115 percent last year, the Straits Times reported on Jan. 28. Overall auto sales dipped to 42,000 units, less than half the annual average in the past five years, the newspaper said.

“Our biggest hurdle is for customers to get over the upfront cash they will have to fork out to purchase the car,” said Ron Lim, general manager at Tan Chong Motor Sales Pte Ltd., Singapore’s official distributor of Nissan cars.

Still, for those who dream of executing the arbitrage of a lifetime and selling a two year old BMW for the price of a new Ferrari, Singapore is your bubble:

“The demand for used cars has gone up,” said Hong, whose stocks included a pre-owned 2008 BMW 335i convertible, which he sold two days ago for more than S$300,000. “The COE for new cars has been going for more money. Those people who choose not to pay the premium, they go for used cars as an option.”

We wonder how long before surging labor and commodity costs force the Bavarian car maker to import the idea, and the prices fo the US, where the ultra wealthy should have no problem with affording BMWs at any price. As for the remainder (or 99%) of the peasants, who cares?

 


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Thu, 02/17/2011 - 13:14 | Link to Comment ghostfaceinvestah
ghostfaceinvestah's picture

Go for the A5, the BMW is so dot-com days (then again, maybe that is appropriate given today's equity markets).

Thu, 02/17/2011 - 13:24 | Link to Comment Ratscam
Ratscam's picture

agree, but I prefer the elegance and style of the RS5, or the new RS3.

Thu, 02/17/2011 - 15:32 | Link to Comment JW n FL
JW n FL's picture

RENN TECH CL 65

Thu, 02/17/2011 - 15:53 | Link to Comment Dolar in a vortex
Dolar in a vortex's picture

CLK Black Series w Evosport mods, that way you can surprise all the Porsches at your local track.

Thu, 02/17/2011 - 19:18 | Link to Comment Ratscam
Ratscam's picture

Mercedes is soooo gay or grand-pa style !!

Thu, 02/17/2011 - 22:24 | Link to Comment Dolar in a vortex
Dolar in a vortex's picture

LOL, your comment makes it clear that you've never seen the Black Series. I'll grant you style points on the RS5 but it's not fast enough.

Now stop focusing on luxury brands you elitist!  ;-)

Fri, 02/18/2011 - 03:34 | Link to Comment Ratscam
Ratscam's picture

Seen and driven, still prefer my RS5 ;)

I was racing a C 63 AMG on the Autobahn and indeed its faster north of 200 km/h due to more horsepower.

The handling of the 4 wheel drive Audi on mountain roads is unsurpassable. Simply amazing the curve drifts, especially on snow. With the back wheel drive C 63 you have to carefully counter steer and especially be careful on handling the power. It's brutal.

Thu, 02/17/2011 - 13:16 | Link to Comment jus_lite_reading
jus_lite_reading's picture

Is Dr. Deficit going Kamakazi? All of them are tools of the devil.

Thu, 02/17/2011 - 13:16 | Link to Comment kato
kato's picture

stupid. i bet they like really the fact that it comes with a personal ass-wiper.

Thu, 02/17/2011 - 13:17 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

We should ring up WilliamBanzai7 in Hong Kong and see if he's up for importing some four wheeled bling and making a few bucks.

Paging Doctor Banzai7, report to the ZH emergency room stat. Code BMW bronze.

Thu, 02/17/2011 - 13:29 | Link to Comment williambanzai7
williambanzai7's picture

You can't just import cars. The reason the cars are so expensive is you need a permit to bring one in and the permits are astronomical.

Conversely the air is clean in Singapore and the public transport is state of the art.

Naturally only millionaire businessmen and financial services employees can afford such cars. That is the price they pay for driving a Ferrari to work.

In addition, the City is wired to charge heavy toll fees for entry into high traffic density areas at rush hour.

Logic dictates the same kind of system should apply to Manhattan. Nothing doing of course. So our public transport sucks.

In HK, you can bring in as many cars as you like, the streets are jam packed at rush hour and the air is literally as bad as it can get.

Thu, 02/17/2011 - 13:31 | Link to Comment Chump
Chump's picture

Yup.  In '98 a '95 Camry was about 75K, so the price for this Beemer sounds about right.  Maybe even a little low.

Thu, 02/17/2011 - 13:41 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

......and the air is literally as bad as it can get.

Well, that explains your brain damage.......which has so wonderfully liberated your artistic madness. Breathe deep WB7 and keep up the frenzied (and inspired) ZH posting pace.

Thu, 02/17/2011 - 16:02 | Link to Comment Sokhmate
Sokhmate's picture

I think you meant dain bramage

Thu, 02/17/2011 - 14:06 | Link to Comment DaveyJones
DaveyJones's picture

"Logic dictates the same kind of system should apply to Manhattan. Nothing doing of course. So our public transport sucks."

was gonna say we'll be forced to get there, then I realized silly, it's too late. Things will really suck first

Thu, 02/17/2011 - 17:41 | Link to Comment tonyw
tonyw's picture

And of course the island is only about 20  miles across at the widest with a 55mph speed limit. Like everywhere else having an expensive car is just a way of showing off. I like the taxis which have a little bell that tings when the speed limit is exceeded:-)

Agree the subway system is great, people are not allowed to eat and drink on the subway so it's very clean like most of S'pore.

housing is expensive too.

Thu, 02/17/2011 - 13:18 | Link to Comment anarchitect
anarchitect's picture

How many strokes of the cane for smuggling one in?

Thu, 02/17/2011 - 13:38 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

340, one for each thousand Singapore $.

You'll cry "BMW" long before then.

Thu, 02/17/2011 - 13:20 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

Notice that Goh is a "financial industry worker".

Who could have guessed? 

This is so sick.

Thu, 02/17/2011 - 13:21 | Link to Comment freddymercury
freddymercury's picture

Was born and raised in Malaysia which neighbours Singapore. Yeap...that price is about right. In Malaysia there is a 200% import duty on luxury cars. You can do the same there as well and not just in Singapore.

Thu, 02/17/2011 - 13:23 | Link to Comment Rogerwilco
Rogerwilco's picture

Wacko-insane arbitrage opportunities like this are never a sign of economic excesses...or an impending "rebalance".

Thu, 02/17/2011 - 13:28 | Link to Comment Bam_Man
Bam_Man's picture

I am the owner of a 1995 BMW M3 (bought new in March 1996) and would not trade it for a brand new 335i.

IMHO, all BMW's made after 1998 are pieces of over-priced, over-engineered junk.

My M3 was over-priced, but was and still is a great car.

Thu, 02/17/2011 - 13:43 | Link to Comment Oh regional Indian
Oh regional Indian's picture

I owned a 1985 528e and it was the best car I ever owned (and I've owned many). The perfect balance of space, power, economy, handling.....

Memories.... I bought it for all of 900 dollars and drove it straight from San Rafael to Mt. Shasta through 100 degree heat in a California Summer. Flawless.

But this Singapore thing is no arbitrage. All taxes and permits. huge taxation.

it's a control society of the worst sort anyways. Sterile. Cameras everywhere.

ORI

http://aadivaahan.wordpress.com/2011/02/16/truth-about-america-truth-about-us/ 

Thu, 02/17/2011 - 18:43 | Link to Comment Amish Hacker
Amish Hacker's picture

Call me old-fashioned, but 1998 is still not old enough, imo. Think pre-cupholder. No electrically-heated outside rearview  mirrors, no cruise control, no airbags, no power steering. 1973 2002 tii: the first sports sedan.

Thu, 02/17/2011 - 13:25 | Link to Comment Atomizer
Atomizer's picture

Can't imagine what a 2011 Bugatti Veyron 16.4 Super Sport would cost.

Thu, 02/17/2011 - 13:25 | Link to Comment A Nanny Moose
A Nanny Moose's picture

Forget the price. The depreciation on that is gonna leave a mark

Thu, 02/17/2011 - 13:26 | Link to Comment Gaston
Gaston's picture

Government taxes, its the same deal in Turkey, If you got the money to buy a car like that, then the government will surely take its cut....

Thu, 02/17/2011 - 17:13 | Link to Comment Freebird
Freebird's picture

Yeh but from recollection the Singaporeans also received a 100% tax offsets for their car payments for the lease / payment plan term...it used to make a lot of sense if you were earning a couple of hundredk a year

Thu, 02/17/2011 - 13:31 | Link to Comment Pee Wee
Pee Wee's picture

My wife's 1997 328is with snowtires was $7k.

Just hit 80k miles. The rest of the car is perfect.

Bam_Man is exactly right.

Thu, 02/17/2011 - 13:28 | Link to Comment Rick64
Rick64's picture

 This is smart planning from the Singapore Government to control the amount of vehicles on the road. Singapore is a small island if they didn't have this restriction it would be Bankok x 10. Their public transportation is excellent and taxis are relatively inexpensive.

Thu, 02/17/2011 - 13:36 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think ETFs are total crap, but if I were to buy one, Singapore would be high on the list with Brasil, Turkey, Israel, and Swedon.  If you are wondering why I picked these donkey necked contries, it is purely based on geographical chokepoints.  I guess Egypt would be there too. 

And while I am pointing out worthless fiat paper investments to buy with worthless fiat money, I will write one word to represent how II think the banksters will profit off of hyper inflation; coca.

Thu, 02/17/2011 - 14:10 | Link to Comment DaveyJones
DaveyJones's picture

it always stays high

Thu, 02/17/2011 - 13:32 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Cars are funny.  They are totally awesome becaue they are such a unique invention, but most people think of them as a literal extention of themselves.  Seen as a right instead of a privilage, Americans go about their day forgeting the reliance.  Soon, when oil is hard to find, the rich will be driving on LA freeways alone for miles and miles; there will be no speed limit in the future.

Thu, 02/17/2011 - 13:35 | Link to Comment Quinvarius
Quinvarius's picture

He can have mine for 230k and I will throw in shipping.  I wanted two 760li's anyway.

Thu, 02/17/2011 - 14:36 | Link to Comment Rockfish
Rockfish's picture

Hold on i've got a beautiful 2002 525 blk/blk ready for delivery $129,999.00 TODAY!

Please send money wire trans only.

Thu, 02/17/2011 - 13:39 | Link to Comment BearishFeijoadaSushi
BearishFeijoadaSushi's picture

$260k is not too far from $170k here in Brazil for the same car. I paid $12k for a 1994 3 series last year. That's something you americans can brag of. A civic costs about $40k. Crappy country in which I live...

Thu, 02/17/2011 - 13:39 | Link to Comment Mr. Poon
Mr. Poon's picture

Forget hig-flow showerheads and incandescant bulbs, the black market has a new favorite hot item!  (And all thanks, not surprisingly, to government regulations . . . )

Thu, 02/17/2011 - 13:59 | Link to Comment Matt SF
Matt SF's picture

Wondering how many BMWs they'll be finding in parking garages a la Ireland & Romanian strategic defaulters.

Thu, 02/17/2011 - 14:03 | Link to Comment PY-129-20
PY-129-20's picture
Here in Germany you can get one for 76 845,82 US-Dollar. And that is probably not even the best price.
Thu, 02/17/2011 - 14:27 | Link to Comment HUGE_Gamma
HUGE_Gamma's picture

autos, electronics, cell phone plans, rent is cheap in the US

Thu, 02/17/2011 - 14:36 | Link to Comment frugartarian
frugartarian's picture

has anyone ever been to singapore? Of course there's going to be a premium for cars, there's no effing space on that tiny island. Not a bubble at all, too many wealthy people over there

Thu, 02/17/2011 - 14:38 | Link to Comment Common_Cents22
Common_Cents22's picture

Any bribable workers at the Singapore DOT to expedite permits?  That's how you get rich in the US too, TBTF and know people in government, just like Blankfein and Dimon do.

Thu, 02/17/2011 - 15:55 | Link to Comment BISTRO
BISTRO's picture

It's pretty much the same amount of taxes as you'd pay in Denmark! (180% + 25%VAT)

Thu, 02/17/2011 - 17:48 | Link to Comment Bokkenrijder
Bokkenrijder's picture

It's either "importing into Singapore" or "exporting to Singapore."

Thu, 02/17/2011 - 23:27 | Link to Comment SmittyinLA
SmittyinLA's picture

The government motors folks in America are drooling at the prospect of auto restrictions. local govts for the fees, and UAW folks for the increased prices for high end rides.  

 

I noticed the 556HP caddies weren't mentioned.

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