By Christopher Tan, Senior Transport Correspondent, The Straits Times, 12 Sep 2016
The growth of Singapore's rental car population remains in the fast lane, fuelled by private-hire players such as Uber and Grab.
According to the latest available figures from the Land Transport Authority, there are now over 40,000 rental cars here - almost 40 per cent more than at the end of last year, and more than double the figure in 2014.
Compared with 2012, the year before Uber and Grab arrived, the rental fleet has grown by 173 per cent. Yet, the overall car population has shrunk by 3 per cent.
Uber is said to account for nearly 15,000 of the fast-expanding cohort. Grab, through tie-ups with rental firms, accounts for around 10,000.
They make up a growing number of private-hire vehicles that are seen by commuters and policymakers as a viable alternative to taxis. The segment is now almost the size of the cab population of 28,000.
According to the latest available figures from the Land Transport Authority, there are now over 40,000 rental cars here - almost 40 per cent more than at the end of last year, and more than double the figure in 2014.
Compared with 2012, the year before Uber and Grab arrived, the rental fleet has grown by 173 per cent. Yet, the overall car population has shrunk by 3 per cent.
Uber is said to account for nearly 15,000 of the fast-expanding cohort. Grab, through tie-ups with rental firms, accounts for around 10,000.
They make up a growing number of private-hire vehicles that are seen by commuters and policymakers as a viable alternative to taxis. The segment is now almost the size of the cab population of 28,000.
Cab firms have taken a "can't fight them, join them" stance, with SMRT and Prime starting their own private-hire fleets.
Even Trans-Cab, a long bitter critic of the newcomers, has entered into an exclusive pact with Grab to use its ride-hailing app. "They do have a superior app. We're doing this to give our cabbies more options," said managing director Teo Kiang Ang.
He said the number of idle cabs in his yard has begun to shrink since the tie-up two weeks ago.
Taxi giant ComfortDelGro, too, is finalising a deal with British ride-hailing start-up Karhoo, which has an app allowing users to compare fares across ride service providers and is working with rental firms to launch private-hire fleets.
Car dealers are also jumping on the bandwagon. Multi-brand agent Cycle & Carriage and Toyota agent Borneo Motors - two of the largest dealerships here - are offering "Uber-style" financing aimed at car buyers who cannot afford or do not wish to go for a hire-purchase deal.
Buyers can drive away with a new car with a down payment of just 10 per cent, and instalment payments over 10 years - versus 30 per cent and seven years for conventional hire-purchase deals.
"We see this as us giving consumers another option of owning a car," said Cycle & Carriage senior manager Loh Shurn Lin, adding that the company expects the private-hire market to continue growing.
However, The Straits Times understands that the take-up rate for these new deals at both dealerships has been lacklustre. Reasons include higher interest rates and insurance premiums and buyers having to register a private-hire business.
"We see this as us giving consumers another option of owning a car," said Cycle & Carriage senior manager Loh Shurn Lin, adding that the company expects the private-hire market to continue growing.
However, The Straits Times understands that the take-up rate for these new deals at both dealerships has been lacklustre. Reasons include higher interest rates and insurance premiums and buyers having to register a private-hire business.
Parliament: MAS, MTI to look into car loan 'loopholes'
Some buyers take up larger and longer loans via private-hire car purchase agreements
By Adrian Lim, The Straits Times, 14 Sep 2016
Cases of car buyers taking up larger loans through private-hire car purchase agreements as a way around the Government's loan restrictions will be investigated.
Acting Minister for Education (Higher Education and Skills) Ong Ye Kung, who sits on the board of directors at the Monetary Authority of Singapore (MAS), served this notice in Parliament yesterday when responding to Mr Pritam Singh (Aljunied GRC).
The Workers' Party MP had raised concerns that private-hire car purchase agreements created a "loophole" or "work-around" to existing vehicle loan curbs.
The MAS rules currently allow buyers to borrow up to 70 per cent of the purchase price, with a loan tenure of seven years.
However, some buyers are taking loans of up to 90 per cent of the car price, and paying it back over 10 years.
They do so through private-hire car purchase agreements in which they buy and register the car under a company, to be used for chauffeuring under ride-hailing apps such as Uber and Grab.
Some buyers take up larger and longer loans via private-hire car purchase agreements
By Adrian Lim, The Straits Times, 14 Sep 2016
Cases of car buyers taking up larger loans through private-hire car purchase agreements as a way around the Government's loan restrictions will be investigated.
Acting Minister for Education (Higher Education and Skills) Ong Ye Kung, who sits on the board of directors at the Monetary Authority of Singapore (MAS), served this notice in Parliament yesterday when responding to Mr Pritam Singh (Aljunied GRC).
The Workers' Party MP had raised concerns that private-hire car purchase agreements created a "loophole" or "work-around" to existing vehicle loan curbs.
The MAS rules currently allow buyers to borrow up to 70 per cent of the purchase price, with a loan tenure of seven years.
However, some buyers are taking loans of up to 90 per cent of the car price, and paying it back over 10 years.
They do so through private-hire car purchase agreements in which they buy and register the car under a company, to be used for chauffeuring under ride-hailing apps such as Uber and Grab.
The MAS has previously said loans taken to purchase private- hire cars do not fall under its car loan restrictions.
But Mr Singh said some people could take advantage of the system.
But Mr Singh said some people could take advantage of the system.
"There is also the prospect of not running it for that purpose at all, as when you register a company for private hire under the Uber or Grab framework but, in actual fact, what you're doing is you're owning a vehicle," he said.
Mr Ong replied that both the MAS and the Ministry of Trade and Industry (MTI) will look into such cases, which would be "in violation of the spirit of the policy".
"I don't think it's correct for this to proceed," he said.
Auto dealers that sell cars to buyers on their own instalment payment programmes have to follow the Hire Purchase Act, which is administered by the MTI.
The MTI also applies the MAS car loan restrictions to non-MAS-regulated entities.
Mr Ong added that private-hire vehicles, such as those used for driving for Uber, are revenue-generating and thus fall under loan considerations for funding a business.
He also said the MAS has not had to take action against any financial institutions since the car loan restrictions were re-introduced three years ago.
Back then, car buyers could get a loan of only up to 60 per cent of the purchase price, with a loan tenure of five years, but this requirement was eased in May.
Mr Ong said the MAS monitors financial institutions, including conducting on-site inspections.
Is private-hire car sector braking soon?
Analysts divided on when speedy growth will slow - and impact operators
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 12 Sep 2016
Transport experts and industry players are divided on when the breakneck growth of private-hire vehicles will slow down.
Latest figures from the Land Transport Authority show the number of rental cars has risen by nearly 40 per cent from the end of last year.
Analysts divided on when speedy growth will slow - and impact operators
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 12 Sep 2016
Transport experts and industry players are divided on when the breakneck growth of private-hire vehicles will slow down.
Latest figures from the Land Transport Authority show the number of rental cars has risen by nearly 40 per cent from the end of last year.
The means there are more than 40,000 rental cars in town, which is double the number in 2014.
SIM University economist Walter Theseira said a "policy oversight" may be fuelling the growth of private-hire cars.
"If the intent of regulating car financing is to discourage excessive consumer debt, then long-term car lease arrangements should also be regulated, because a lease also carries financial penalties if the consumer is unable to fulfil the terms."
Dr Theseira said the private-hire market "has allowed car users to monetise their cars" but "the person for whom this option is the most appealing is probably not in a good position to afford a car, particularly with restrictions on financing".
Nanyang Business School Adjunct Associate Professor Zafar Momin said the rising popularity of firms such as Uber and Grab has been fuelling the boom in the private-hire car population.
He said taxis have been "frustrating commuters with a long list of pain points" - from patchy availability to mind-boggling fares and surcharges. But he said: "It is hard to predict whether the continued growth will slow... It depends on whether taxi operators can up their game."
Some quarters reckon the market is already reaching saturation.
Some quarters reckon the market is already reaching saturation.
Mr Neo Nam Heng, chairman of taxi and private-hire operator Prime, said the rental business is slowing down with the economy.
He said "a loophole for consumers to bypass car loan curbs" is fuelling the population boom.
Uber driver Jerry Yeo, 43, is finding it harder to hit passenger targets to qualify for incentive payments. He said: "I will be giving up my rental car for a shared rental fleet with hourly rates next month because I don't feel positive about future earnings with Uber."
Other industry watchers reckon the newcomers are buying market share at huge expense to profitability, and that they will soon reach their own pain threshold.
Uber, for instance, was reported to have incurred losses amounting to US$1.2 billion (S$1.6 billion) in the first half of this year.
Uber, for instance, was reported to have incurred losses amounting to US$1.2 billion (S$1.6 billion) in the first half of this year.
Be more hands-off in regulating new business models
To develop an innovation culture that will prepare us well to respond to the disruptive changes brought about by the likes of Uber and Airbnb, we need a regulatory environment that supports creative and novel ideas ("Revive disruptive spirit of yore"; last Wednesday, and "More space needed for people to take the initiative" by Dr Thomas Lee Hock Seng; last Friday).
What would such a regulatory regime look like?
Perhaps a good description could be "permission-less innovation". This is the notion that any new business model is permitted by default, unless a compelling case can be made that it causes danger or serious harm to society.
This would be regulation with an ultra-light touch, essentially allowing players in the market to self-regulate and achieve equilibrium without intervention as much as possible. Rules and guidelines can be put in place later, if necessary.
In an economy characterised by widespread and continuing disruption, regulators should err on the side of liberality, not caution.
It is better to push the envelope as far as possible and learn from mistakes, than to design a regime to eliminate all risks, and consequently kill potentially brilliant ideas.
Like it or not, such disruption will be increasingly pervasive in the future business landscape, and will have far-reaching and uncertain social consequences.
To develop an innovation culture that will prepare us well to respond to the disruptive changes brought about by the likes of Uber and Airbnb, we need a regulatory environment that supports creative and novel ideas ("Revive disruptive spirit of yore"; last Wednesday, and "More space needed for people to take the initiative" by Dr Thomas Lee Hock Seng; last Friday).
What would such a regulatory regime look like?
Perhaps a good description could be "permission-less innovation". This is the notion that any new business model is permitted by default, unless a compelling case can be made that it causes danger or serious harm to society.
This would be regulation with an ultra-light touch, essentially allowing players in the market to self-regulate and achieve equilibrium without intervention as much as possible. Rules and guidelines can be put in place later, if necessary.
In an economy characterised by widespread and continuing disruption, regulators should err on the side of liberality, not caution.
It is better to push the envelope as far as possible and learn from mistakes, than to design a regime to eliminate all risks, and consequently kill potentially brilliant ideas.
Like it or not, such disruption will be increasingly pervasive in the future business landscape, and will have far-reaching and uncertain social consequences.
Singapore is exceptionally well placed to benefit in this new digital marketplace.
We have a pragmatic, well-educated and tech-savvy population, world-class infrastructure and a highly efficient administration, among many other advantages.
Our small size and lack of natural resources are not constraints; in fact, they make us nimble and resourceful.
The vibrant eco-system for start-ups that has been built up over the past few years prepares us well for a knowledge-based, innovation-driven economy.
We are in a strong position to be globally competitive in the exciting economy of the future. However, we must be willing to loosen up and take risks.
Francis Yeoh (Dr)
ST Forum, 13 Sep 2016
We are in a strong position to be globally competitive in the exciting economy of the future. However, we must be willing to loosen up and take risks.
Francis Yeoh (Dr)
ST Forum, 13 Sep 2016
* Rental cars, unhired taxis sitting idle
Pool of about 2,000 unhired vehicles shows market has hit saturation point, say insiders
By Christopher Tan, Senior Transport Correspondent, The Sunday Times, 15 Jan 2017
Private-hire operators are plagued by a rising number of unhired cars even as the overall rental car population keeps hitting record highs month after month.
Checks by The Straits Times last month revealed that there were close to 1,000 brand new cars - many wearing the Uber-owned Lion City Rental number plates - lying unused at a number of multi-storey carparks here.This mirrors the situation faced by taxi companies, which are also saddled with well over 1,000 idle cabs.
According to Land Transport Authority statistics, there are around 50,000 rental cars in Singapore - more than three times the rental car population before Uber and Grab entered the fray in 2013.
As many as 30,000 are attributable to private-hire companies such as Uber, Grab, EthozCab, Strides, Prime, Tribecar and Wolero.
The taxi population stands at around 27,500, 3 per cent smaller than in 2013. While the dip is relatively minor, it is a contrast to decades of continuous growth.
Insiders said the large pool of unhired vehicles is a sign that the market has reached saturation point.
"The honeymoon period is over," said the head of a rental fleet owner who declined to be named because he supplies cars to the main private-hire players.
"There are definitely not enough drivers to go around. And those who have been driving are finding out that it's not that easy to make a living."
Pool of about 2,000 unhired vehicles shows market has hit saturation point, say insiders
By Christopher Tan, Senior Transport Correspondent, The Sunday Times, 15 Jan 2017
Private-hire operators are plagued by a rising number of unhired cars even as the overall rental car population keeps hitting record highs month after month.
Checks by The Straits Times last month revealed that there were close to 1,000 brand new cars - many wearing the Uber-owned Lion City Rental number plates - lying unused at a number of multi-storey carparks here.This mirrors the situation faced by taxi companies, which are also saddled with well over 1,000 idle cabs.
According to Land Transport Authority statistics, there are around 50,000 rental cars in Singapore - more than three times the rental car population before Uber and Grab entered the fray in 2013.
As many as 30,000 are attributable to private-hire companies such as Uber, Grab, EthozCab, Strides, Prime, Tribecar and Wolero.
The taxi population stands at around 27,500, 3 per cent smaller than in 2013. While the dip is relatively minor, it is a contrast to decades of continuous growth.
Insiders said the large pool of unhired vehicles is a sign that the market has reached saturation point.
"The honeymoon period is over," said the head of a rental fleet owner who declined to be named because he supplies cars to the main private-hire players.
"There are definitely not enough drivers to go around. And those who have been driving are finding out that it's not that easy to make a living."
Uber driver Jerry Yeo, 44, switched from a monthly rental car to an hourly arrangement with Smove recently because "the cost is lower". Mr Yeo has been driving with Uber for just over two years, but reckons he will not stay much longer. "The earnings are not attractive," he noted. "There are no long-term prospects."
Taxi driver Alan Tang, 54, said cabbies are also feeling the earnings crunch because of the heightened competition brought about by private-hire cars.
Taxi driver Alan Tang, 54, said cabbies are also feeling the earnings crunch because of the heightened competition brought about by private-hire cars.
"We should do away with all the surcharges, which are killing taxi drivers," Mr Tang said, noting that private-hire cars do not impose such surcharges. "Otherwise, there will be fewer and fewer taxis on the road in the future."
Mr Tang added: "I was at the CityCab building last week and even the carpark ramps are filled with cabs. They've run out of space to park these idle taxis."
Asked about its unhired rate, a ComfortDelGro spokesman said: "We do not divulge competitive information."
Likewise, neither Uber nor Grab would comment on the number of idle cars they have.
"We don't disclose that kind of information," an Uber spokesman said. His Grab counterpart said: "We are experiencing a healthy demand for rental cars. Currently, there are more than 50,000 Grab drivers in Singapore."
SIM University economist Walter Theseira said: "The regulators want to take advantage of the potential third-party apps' offer to improve the taxi market, but they are very cautious about breaking the existing taxi pricing and operating model."
SIM University economist Walter Theseira said: "The regulators want to take advantage of the potential third-party apps' offer to improve the taxi market, but they are very cautious about breaking the existing taxi pricing and operating model."
National University of Singapore transport researcher Lee Der-Horng said: "Supply has increased but demand has not grown accordingly.
"This is an unhealthy development for taxi drivers since most of them take up driving as their profession and it is their rice bowl. However, private-hire drivers are much more fluid since most of them are part-time drivers."
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