Some motorcycle buyers feel the pinch, but LTA says ARF changes 'carefully calibrated'

Some motorcycle buyers feel the pinch, but LTA says ARF changes 'carefully calibrated'

LTA says that out of the 8,336 motorcycles that were registered in 2016, 63 per cent of them would have come under Tier 0 and not drawn any additional ARF under the new system.

SINGAPORE: National serviceman Izz Akmal was saving up to buy a bigger motorcycle. But after the recent changes to the motorcycle tax system that make it more expensive to get that high-end bike, he said that his plans to upgrade his Gilera VXR has been stopped in its tracks.

"I'm pretty sure that my chances of getting a bigger bike are rather slim," the 24-year-old said. "Now I really plan to extend my COE (Certificate of Entitlement) already." The COE for Mr Akmal's motorcycle expires in September.

Dealers told Channel NewsAsia that they too are feeling the pinch.

"Sales-wise, definitely negative for the big-capacity bikes. Hopefully we see an increase in the small-capacity bikes or the mid-tier," said distributor Eugene Mah.

Mr Mah’s company, Mah Pte Ltd, makes 20 to 30 per cent of its sales from big-capacity motorcycles.

"Because we deal with mostly the mid- or the high-ends, the majority of our customers are in the second tier," he said, referring to motorcycles with open market values (OMVs) of between S$5,000 and S$10,000.

“I know that overall, of course, there's the first tier - hopefully they do benefit from this new scheme, but judging from today's COE (prices), it may not be the case."

Mr Mah said he and other dealers were surprised to see COE premiums go up on Friday (Feb 24) in the first bidding exercise since the new system was announced.

He attributes this to panic buying - customers wanting to get a motorcycle before changes to the Additional Registration Fee (ARF) kick in.

motorcycle ARF

He added that his company may increase prices "marginally" and that the ARF changes may result in a smaller variety of motorcycles being brought into Singapore.

"There are some models that have had their prices increased so drastically that they may not be brought in, due to it not making business sense to bring in the bike anymore," he said.

MORE THAN HALF OF NEW MOTORCYCLES UNAFFECTED: LTA

In response to queries, the Land Transport Authority (LTA) said the new ARF system has been "carefully calibrated" to ensure that more than half of newly registered motorcycles will not be affected by the changes.

According to LTA figures, of the 8,336 motorcycles registered in 2016, 63 per cent - those that come under Tier 0 - would not have had to pay any additional ARF.

Motorcycle OMV

(Source: LTA)

"The 19 per cent in Tier 1 would pay up to S$1,750 more," LTA said.

"Of the top 18 per cent of motorcycles in Tier 2, with OMV above S$10,000, only seven motorcycles in 2016 would have had to pay more than S$20,000 more in ARF based on their OMVs of more than $30,000."

LTA pointed out that the OMV of such motorcycles is equivalent to that of a Honda Odyssey 2.4 EXV-S CVT - a car that comes under Category B, which is used for larger and more powerful cars.

It added that popular motorcycle models such as the Yamaha Jupiter T150, Honda CBF190WH and Yamaha FZN 150 would not be affected. These are motorcycles with OMVs of under S$5,000, and whose new owners will continue to pay the current 15 per cent in ARF.

Motorcycle ARF tiers

(Source: LTA)

In the 2017 Budget, it was also announced that motorcycles will no longer be part of the COE quota in the open category, or Category E.

Some have called this a silver lining. Mr Mah, for one, said this would mean more supply - something customers would welcome.

But ultimately, he said he also hopes the authorities can further tweak the system.

"Now you have guys who do not sell their bikes because buying a new bike is just too expensive - they’ll renew (the COEs)," Mr Mah said. "Smaller bike capacity buyers will still carry on buying because they need it, and the guys who used to be able to afford a big bike may have to downgrade to a mid-tier one. So this will actually drive the demand for COEs, and if the supply is not increased substantially, it's just going to be a cycle."

"We are trying to appeal to the authorities and trying to see how, as much as possible, not to transfer the cost over to the consumers," he added.

Source: CNA/dt

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