5 Factors That Influence the Used Car Resale Value In Singapore
When the time has come to trade in an old Singapore used car for a newer model, the one key budget item is resale value.
You might not be able to make a meaningful upgrade compared to the vehicle you currently own if it will not be able to fetch a significant price on the marketplace.
But how exactly do you calculate the used car resale value in Singapore?
In Singapore, the resale value of used cars is mostly determined by five major factors. Knowing these factors and understanding how to apply them to your advantage is what can make the difference between a great, profitable sale and a complete disappointment.
Follow this quick guide to understand what the five factors are and how they can influence the viability of selling your vehicle.
The Importance of OMV, ARF, and COE for Singapore Used Car Sales
In Singapore, the value of any used car value is determined in large part by a series of acronymic factors called OMV, ARF, and COE.
It is crucial to understand the meaning and significance of these in order to have a realistic perspective of how much your used car is ultimately worth.
Understanding OMV
First, let us take a look at the OMV. The abbreviation OMV stands for Open Market Value and is representative of the base value of the car. In other words, it describes the sum that best represents the original sticker price of the vehicle adjusted for Singaporean currency.
The OMV is defined by Singapore Customs at the moment that the vehicle is originally received from overseas. OMVs are only ever issued in this particular context, and you cannot apply for the Singaporean Customs Office to re-assess the OMV of your Singapore used car.
Note that the OMV includes, but is not exclusively composed of the car’s original sales value. Additional surcharges such as mandatory insurance, shipping and handling, as well as minor fees levied by Customs also factor in.
The Effect of RF and ARF on Used Car Resale Value in Singapore
There are two major taxes that affect any used car’s resale value in Singapore. The first and simplest of these is the RF, or Registration Fee. It is currently set at a flat rate of $140, irrespective of the make, model, or condition of the car.
The ARF, or Additional Registration Fee, is more complicated. It is added on top of the OMV in order to calculate the total value of any used car in Singapore.
The ARF is calculated based on the OMV such that vehicles with higher OMVs will receive an appropriately higher ARF and vice versa.
An ARF is only issued at the moment of the car’s first registration in the country, and just like the OMV, it cannot be changed or updated in any way.
The precise formula for calculating your used car’s ARF works as follows.
If your car’s OMV is equal to or less than $20,000, the ARF will be simply equal to that number.
If your car is worth more than $20,000, then each dollar on the OMV from that number and up to $50,000 will be taxed at a rate of 140%, i.e. forty percent above market value.
Additionally, values above $50,000 are taxed at an even higher rate of 180%, or eighty percent above the OMV.
Determining PARF
In addition to the RF and ARF, a third Registration Fee also comes into play. It is the PARF, the Preferential Additional Registration Fee. This fee does not affect the value of your used car directly, but it is nonetheless highly relevant to your resale strategy.
This is because the PARF is actually not a flat fee like the RF, nor a progressive tax like the ARF. Instead, it functions as a rebate that you can cash in, so to speak, if you wish to de-register your Singapore used car and designate it to be scrapped.
If you do so within ten years, you can apply for a PARF which will be paid out to you by the Land Transport Authority. The PARF is always calculated as a percentage value of the ARF, where younger vehicles are allotted higher values than older ones.
If your used car is five years old or less, the PARF comprises 75% of the original ARF. If you conclude after a thorough assessment that selling your vehicle would not be profitable, de-registering it instead and collecting the PARF might be a sound alternative.
The Role of COE in Singapore Used Car Value
The COE, short for Certificate of Entitlement, is the last of the major institutional factors that affect the value of used vehicles in Singapore. In order to operate a motor vehicle, you need to purchase a COE, which is currently done by means of the national COE Open Bid system.
Though starting bids are set at $1, COE prices routinely run in the tens of thousands of dollars as the supply of Certificates is deliberately set far below demand. Since only one bid is allowed per private individual, each bidding cycle gets highly competitive.
COEs also vary in terms of cost based on whether your car falls under Category A (engine size below 1,600cc and engine power below 97kW) or Category B (engine size above 1,600cc and power above 97kW). The COEs for the latter are generally much more expensive.
Any COE is initially valid for ten years, after which it can be optionally renewed by means of a PQP, or Prevailing Quota Premium. This extends the validity of the COE for another five to ten years.
Just as with the PARF, you can also get a government rebate for your COE if you de-register your vehicle voluntarily within ten years of purchase. In this case, the COE rebate simply amounts to the total value of your Certificate minus the years you have owned your vehicle for.
Hence, if you paid a sum of $50,000 for your COE and ask for a rebate after 5 years, you will receive a total of $25,000.
Adding All the Factors Up
To get a good picture of your Singapore used car’s resale value, add up all of the above factors. Below, you will find a realistic example using figurative values.
Let us assume that your used car’s original OMV was determined by Customs at $65,000.
Based on this, the ARF of the car totals 20,000 + 42,000 + 27,000 = $89,000.
Add to that the RF of $140, and you have a total resale value of $154,140.
Assuming that the car is less than five years old, the maximum PARF rebate you could receive for this vehicle totals 89,000 x 75% = $66,750. Since this is higher than the OMV, de-registering the car is a viable alternative to selling it outright in this particular instance.
Of course, this will differ in practice depending on the value of the COE and the corresponding COE rebate. As these factors are entirely ruled by market rates, however, it is very difficult to make any useful predictions based on theoretical assumptions.
Brand Value and Its Effect on Singapore Used Car Resale Value
While the OMV, ARF, and COE can and often do determine the resale value of a Singapore used car to a major extent, other factors also come into play. One of these is the subjective value attributed to the make, or brand, of the car in question.
In Singapore, marques such as Lexus, Infiniti, Jaguar, and Mercedes-Benz regularly command higher prices than models by makes such as Toyota, Hyundai, or Mitsubishi.
This holds true even when equipment levels, performance, and overall build quality are near-identical.
Past Ownership History
This is another rule of thumb to consider when reselling your used car. Generally speaking, vehicles with a higher number of past owners sell for much less than those which have only had one or two prior owners.
In Singapore especially, a used car sold by its original buyer will fetch much higher prices – all else being equal, of course – than another with a more complicated history.
Service History
It can be said with little doubt that few buyers would be interested in purchasing a used vehicle that has not been properly maintained.
However, it is not just important to keep your Singapore used car in good shape.
You should also make sure that you can certify its continuous upkeep and care by means of a signed service record that shows repairs and maintenance works carried out at all intervals relevant to your make and model.
If your car has ever required accident repair or the replacement of any major components outside of scheduled maintenance, this should also be noted in its records.
The Mileage Factor in the Context of Singapore Used Car Sales
Like elsewhere, mileage also plays a huge role in determining used car prices in Singapore. Buyers will much more readily invest in a used vehicle if the odometer confirms that it has seen only gentle use during its lifetime.
Depending on how long your used car has been on the road and how it has been driven in the past, mileage may differ greatly even compared to a similar make and model.
For instance, one 2005 Honda Accord might show 200,000 kilometers on the odometer or more if it served as a daily commuter, while another that only saw infrequent use as a family vacation vehicle may not even amount to a third of that number.
Bringing it All Together
The above five factors – governmental taxes and rebates like the OMV, ARF, and COE, the car’s brand value, past ownership and service history, and mileage – all combine to form the overall used car resale value in Singapore.
Now that you know them, it is time to apply them to your individual case.
Carefully assess how your used car fits into the categories and baselines described above. From there, you should be able to derive a sound idea of how much it might be able to fetch for sale – and what your alternatives might be.
Remember that you don’t have to attempt this all on your own, though.
Nothing can beat a professional consultation and professional service when it comes to buying or selling a second-hand vehicle in Singapore.
For that, we can only recommend the seasoned experts at Car World Automobile.
With decades of experience in dealing with the intricacies of the Singapore used car market, it is no wonder that thousands have shopped hassle-free at Car World Automobile since 2002.
