Tiny SG: Article: What Singapore’s Luxury Car Market Reveals About Income Inequality

As COVID-19 wreaks havoc throughout the global economy, it’s difficult to imagine any country out of the pandemic without a sizable portion of their population affected financially. In Singapore, bankruptcy has reached an all-time high in March 2020, thousands of people have been furloughed and a recession is looming on the horizon. To add on to the financial grievances that occurred due to COVID-19, Singaporeans also have to contend with a high cost of living, ranging from high real estate and car prices to the increasing cost of common household items. Take cars, for instance. Whereas a 2019 Toyota Corolla typically costs between $17,000-$21,000 (S$23,500-S$29,000) in the US, the same car will cost around 3.5 times as much in Singapore due to additional fees and taxes. Thus, cars have become a status symbol of the wealthy and an aspirational purchase for many Singaporeans. However, looking at Singapore’s car industry during the COVID-19 pandemic and the years before, we have found evidence suggesting that wealth inequality may be widening during this pandemic.

Study Highlights

Despite cancelled COE bidding and closure of showrooms, 40% of new car registrations were luxury cars (including Aston Martins, Porsche and Bentleys) in April and May 2020 compared to the 19-25% they represented in previous years

Certain luxury brands like Rolls Royce may even see increases of sales this year due to a fairly unaffected ultra-luxury car market

Changes in COE prices disproportionately affect the middle class’s ability to buy a car—in 2013, when COE prices were at their highest, luxury car registrations dropped 14%, while non-luxury car registrations dropped 24%

luxurycarsaspercentoftotalcarregistratio