A good time for SMEs to buy or upgrade their commercial vehicles – why and the benefits

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    25 May 2018

    Key Takeaways

    • COE for commercial vehicles hit an 11-month low in April 2018 of around S$34,000, continuing a downward trend
    • Older vehicles have higher maintenance expenses and opportunity costs
    • Up to S$20,000 rebates with LTA and NEA's Vehicular Emissions Scheme

    5 mins read


    In the course of running a business, commercial vehicles are the lifeblood of daily operations. From transporting workers to delivering goods, a reliable vehicle can make a huge difference to operational efficiency and customer satisfaction.

    However, a number of SMEs retain older commercial vehicles despite the fact that they have become less dependable. Some have not considered upgrading due to cost concerns while others might believe that as long as a vehicle is still functional, it is good enough for their needs.

    While these arguments might sound comforting in the short term, the truth is that it can result in bigger costs to time and finances. SMEs should upgrade from their old commercial vehicles and there's no better time to do it than now. Here are some reasons why:


    Maintaining a vehicle way past its prime drains finances

    Older commercial vehicles can accumulate maintenance costs. While such servicing happens only occasionally, the fact is that these expenses can creep up invisibly over the course of a few years.



    According to industry estimates, the total cost of getting an average vehicle regularly serviced for approximately 100,000 kms is over S$2,600 on average*. This amount will continue to rise; the older a vehicle gets due to more wear and tear. In addition, they have a higher tendency for vehicle breakdowns or getting into accidents, which can incur additional expenses.

    SMEs are not only affected in terms of money, but also missed business opportunities. Time is of the essence when it comes to tasks such as making sure deliveries are made punctually. The resources spent on vehicular repairs could be better re-directed to support new business initiatives or winning new customers.


    According to industry estimates, the total cost of getting an average vehicle regularly serviced for approximately 100,000 kms is over S$2,600 on average*. This amount will continue to rise; the older a vehicle gets due to more wear and tear.


    COE premiums are showing a downward trend

    The COE prices for commercial vehicles are lowering in recent months.



    In April, the price fell by 2.9 percent to hit an 11-month low of approximately S$34,000. This slump is not an isolated incident either. Starting early this year, COE prices have been on a declining trend. This is in spite of prospects of a smaller quota ahead and events such as the Singapore Motorshow, which usually triggers a rise. Meanwhile, the industry predicts that the trend is likely to continue in light of the upcoming changes to the Vehicular Emissions Scheme.

    Hence, SMEs that have major cost concerns can seize the opportunity to buy or upgrade their vehicles before prices go up again. To help finance the purchase, they can seek additional capital from UOB's Commercial Vehicle Loan.


    In April, COE prices for commercial vehicles fell to an 11-month low of around S$34,000, a continuation of a downward trend since the beginning of 2018.


    Calculate the loan amount and monthly estimated repayments with UOB’s Commercial Vehicle/Hire Purchase Loan Calculator.


    More savings with government schemes and assistance

    Market forces aren’t the only reason that makes it an opportune time to purchase a new vehicle. Business owners can also take advantage of numerous government schemes and subsidies to reduce their buying cost.

    The Early Turnover Scheme for example, offers discounts when vehicle owners replace their Category C diesel vehicles with newer, cleaner models. While the scheme has ended for pre-Euro/Euro 1 vehicles, it has been extended for Euro 2/3 vehicles to July 2019. By replacing older vehicles with an electric vehicle and Euro 6 or equivalent vehicle, business owners can enjoy significant subsidies.



    Shifting to new and less-polluting vehicle models like hybrids also lets SMEs enjoy additional rebates. From now until December 2019, the government is assessing newly-purchased vehicles for pollutants like hybrocarbons and carbon monoxide. Under the Vehicular Emissions Scheme, business owners can gain rebates of up to S$20,000 for the highest banding. The reverse, however, also applies. Those who do not upgrade and are found to use more polluting vehicles could incur a surcharge of the same amount.

    Furthermore, SMEs can bring down the costs with Hire Purchase Loan from UOB Business Banking, providing SMEs the flexibility to lower their installments based on their unique needs by spreading payments up to seven years.


    SMEs that take advantage of the Vehicular Emissions Scheme can enjoy up to S$20,000 in rebates for their new vehicles.


    Avoid going through middlemen for more visibility and control

    SMEs can also seek additional help when buying a new commercial vehicle by liaising directly the bank for advisory and loan needs instead of going through middlemen such as vehicle salespersons, for more visibility and control over the process.

    UOB Commercial Vehicle Loan can finance new commercial vehicle fully, with up to 100 percent of the market valuation or purchase price.

    Furthermore, costs can be brought down with the flexibility to lower their installments based on their business needs and pay at their own pace by spreading repayments up to seven years.

    The time is right to consider purchasing a commercial vehicle. SMEs should leverage the numerous opportunities shared to better optimise their purchase and ownership.

    *numbers are based on industry estimates and are subjected to change over time

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