The time is ripe for all players in the automotive sector to join forces in creating an integrated and seamlessly connected ecosystem
Cars are often synonymous with mobility, social status, and most importantly, freedom. As a result, owning a car is both an aspiration and an expectation for many people. But that is often easier said than done, especially in Singapore.
High excise duties and Certificate of Entitlement (CoE) prices regularly see Singapore’s top global rankings for the highest car ownership costs. That is even before considering all the ancillaries of owning a car, such as insurance, tax, maintenance and more.
Ride and car-sharing services have emerged as popular alternatives to traditional car ownership, but the sheer mobility of having a personal vehicle remains unrivalled and highly coveted. In fact, last year, car ownership rose by four per cent even as people were driving less due to circuit breaker restrictions. To cater for this demand, it is important for stakeholders in the automotive ecosystem to work together and help drivers overcome the hurdles to car ownership.
Addressing the barriers to entry
Cost is the primary barrier to car ownership in Singapore. According to the Land Transport Authority, this year’s first round of CoE bidding saw prices rise as high as US$99,999. That is just for the right to own a car for 10 years.
Then there is the Additional Registration Fee, excise duty, GST and the price of the actual vehicle itself, not to mention fees for petrol, insurance, road taxes, maintenance and more. This often results in a staggering final bill.
The second hurdle is complexity. Aside from choosing the car model, a significant amount of paperwork must be completed for CoE bidding, loan and insurance applications, tax filings and so on. Second-hand car buyers also must do their research and inspections to avoid being saddled with a lemon.
The final step is usually the time-consuming ‘shopping around’ for the best prices on essential car services such as servicing and maintenance.
Last but certainly not least is flexibility. The astronomical fees associated with CoE bidding alone tend to mean that successful bidders are effectively ‘locked in’ to a car for at least 10 years. However, a driver might start a family or emigrate for work at that time, and their car needs may change.
After the CoE expires, car owners then face the dilemma of either renewing the CoE and paying higher road taxes or applying for a brand new one, both costly but necessary options.
Connection through collaboration
Much of what makes car ownership so onerous is the fragmented state of the automotive industry. Customers spend a lot of time and effort comparing prices and service packages. If players in the automotive ecosystem can collaborate to provide a more streamlined experience, this would greatly improve accessibility for drivers and boost the overall industry.
Car subscription is one example of a unified and connected automotive ecosystem. A typical car subscription package wraps the A-Z of car ownership up in a neat all-in-one package. Users sign up on a digital platform in minutes and get everything included for the duration they want with a single fixed monthly fee, car, insurance, maintenance and more. This also ensures dealers have a continuous stock rotation, while workshops and insurance providers have a steady stream of customers.
This solution also streamlines and simplifies the ownership process. Drivers no longer have to negotiate individually with different companies and navigate a maze of regulations that differ according to the various related industries. They have an easy benchmark to compare value between providers, which was more challenging in a fragmented landscape.
A connected ecosystem can have a positive impact on cost due to economies of scale. Partners in a car subscription package, for example, often gain access to a wider customer pool due to cross-promotion and greater audience reach. They can thus offer attractive deals such as brand-new cars, enhanced service offerings and full insurance coverage at more affordable prices, allowing drivers to tailor their car ownership to their changing needs, tastes and budget.
Drivers also become more receptive to new automotive technologies because of the reduced upfront investment and commitment required in such ecosystems. Using the car subscription example, platforms can offer electric or autonomous vehicles for customers to try out affordably and flexibly. Based on the customer feedback collected, ecosystem players could then create more advanced and efficient products and services.
Integrated for the future
Ultimately, car ownership is about access to mobility. However, the very concept of mobility is constantly evolving, especially as we step into a technologically-driven world, so the ecosystem must evolve alongside it to keep pace.
Meeting the driver’s needs must be at the forefront of the industry’s goal to achieve sustainability, which can only be holistically achieved through collaboration between all industry stakeholders.
The time is ripe for all players in the automotive sector to join forces in creating an integrated and seamlessly connected automotive ecosystem designed to serve drivers better. Our pursuit of a more mobile future depends on it.