Seriously though–what goes into a car valuation?
Let’s say you’ve owned a car for a few years now, and you’re thinking of selling it. Perhaps you want to buy a used car and can’t tell if the seller’s asking for a fair price. Or maybe you want to buy some car insurance, if you haven’t already.
But how do you know what it’s worth? In fact, why is a car, new or secondhand, priced the way it is? And how can you figure out whether you’re getting a good deal from all the companies and dealers who give you quotations?
In this post, we delve into a list of factors that usually affect car valuations. They aren’t all weighted equally, and the final figure will vary. But, you’ll want to use this list as a guideline to find out whether a) a used car you’re buying might be overpriced or not; and b) whether you’re charging too much or too little for your car.
This list is useful for looking at new cars, too: if you’re buying a new car, you’ll want to keep its potential resale value in mind, as you won’t own a depreciating asset for life. (You could, but that’s another story altogether.)
Factors affecting a car valuation
Open Market Value (OMV)
Think of this as the base cost of the car, as evaluated by Singapore Customs. The OMV of your vehicle takes into account not just the purchase price of the car before it arrived in Singapore, but also the freight costs, insurance, and all the other costs the importer has to front before it even gets to our little red dot. This figure becomes the basis for all the other fees and taxes involved in buying a car, like the ones that follow...
Registration fees 💸💸💸
When you register a vehicle in Singapore, you have to pay a bunch of registration fees 💸 These are, respectively, the Registration Fee and Additional Registration Fee––or RF and ARF respectively. (Who let the dogs out?)
The RF is a flat fee of $140, but the ARF has its own tiered system for vehicles registered with COEs. Generally speaking, the ARF is based on the OMV of the vehicle, and is a whopping 100 to 180% of the OMV. You’re literally doubling the price of the car before it even goes to the market. And we haven’t even gotten to the COE, which is pretty damn expensive. See why Singapore is the most expensive place in the world to be a car-owner?
(And yes, these acronyms make our heads spin too.)
On the bright side, there’s the Preferential Additional Registration Fee (PARF) rebate, which is calculated based on the OMV. The PARF is the amount of money you can reclaim when selling your car before its 10th birthday. Why 10? Because that’s how long one COE typically lasts. However, if you renew your COE, you won’t be entitled to a PARF rebate. In other words, your car is just too old.
Certificate of Entitlement (COE)
The COE is what gives you the right to register, own, and use a vehicle in Singapore––they exist to control the number of cars on Singaporean roads. COE prices aren’t fixed: they depend on market demand, as well as the particular category of your vehicle. Your car is also valuated depending on how much time you have left on the COE. (Generally speaking, the more time you have left, the higher the remaining value of the car.)
An excise duty is the tax imposed on imported products––i.e., every single car on Singaporean roads. (At least, until Made-in-Singapore Hyundai’s EVs start going on sale…!) The excise duty on vehicles is 20% of the OMV. (OMG.) Additionally, GST is applied at 7% of the combined OMV and Excise Duty.
Selling cars is a business like anywhere, and dealers have to cover expenses and make some profit––so we can pay our staff (and this writer) and reinvest in our business! Margins vary wildly between dealers, and they can be anywhere from 15% for cheaper brands to around 50% for luxury vehicles. This does mean dealer margins can really impact car valuations, so you’ll want to find a reputable dealer who won’t screw you over!
(By the way, if you’re looking to buy a used car or sell one, ST Auto specialises in second hand cars. Our customers have generally been very happy with our services!)
This is the total distance a vehicle has covered over the course of its lifetime, and it’s a key factor in a used car valuation. When someone’s buying a second hand car, this is usually the first thing they’ll ask––how far has it travelled? Most buyers might not even bother checking out the rest of the car if they feel the mileage is too high for their liking. But if you have a used car with low mileage, that’s going to be hot in the used car market.
It might be obvious, but it bears repeating––buyers will prefer a used car that’s in tip-top condition over one that shows more wear and tear. Yes, even minor bumps and scratches might affect your car valuation if you’re not careful! Take care of your car, make sure you stay up-to-date with maintenance, don’t get into accidents, and your car resale value will be a lot higher than if you don’t do all of that.
Like it or not, some brands do command a higher resale value than others. Many Singaporeans do gravitate to particular brands for reliability and affordability––think Japanese and Korean car companies like Honda, Toyota, Kia, Hyundai––and unfortunately brands like Perodua or Citroen just don’t do as well in the used car market. Consider this when you’re purchasing a new car.
Supply and demand
At the end of it all, market conditions play a major role in your car valuation. You could have the shiniest car you paid half a million dollars for just two weeks ago, but you can’t resell it if there’s no demand for it. Supply and demand make up the rest of the car’s value, and that will really depend on the kind of car it is. Automatic mass-market cars are generally more appealing to the average Singaporean––at the end of the day it’s about getting through your daily life––so there’s always going to be some demand for a nice second hand Prius. Limited edition cars often see higher demand too, due to their rarity.
Do you need a car valuation? We’d love to help you out. Head on over to ST Auto for a chat and test drive with our friendly sales staff! Call +65 6464 9098 or email us at email@example.com