I read an article in the Straits Times today that the tight COE supply might make the sales of used cars to hit a 10-year high in Singapore.
In the first quarter of 2011, 15,441 cars changed hands and this figure is more than twice the 6,896 new cars sold (click on hyperlink to see figures by LTA). The number of used-car transactions is likely to hit a 10-year high at this rate. Some industry players predict that the growth will continue over the next two years due to the short supply of COEs. This has driven up premiums and hence, the prices of new cars. The number of COEs is expected to hit rock-bottom between this year and 2013.
I feel all the above figures bode well for Vicom as they derive income from vehicle inspection of motor vehicles. Motorcars three to ten years of age have to go for vehicle inspection biennially. Looking at the age distribution of motor vehicles, the age of cars between three to less than six years makes around 53%, the bulk of the percentage. I’m sure this particular trend will continue to increase in the coming years with the tight COE supply. Vicom, having a duopoly in the vehicle inspection arena, is in good stead to capitalise on this trend.