By James Wong
Buying a car used to be something you do because you needed one. You use it to get to work, to do work and to get home. Now, instead of being a tool, a car is now becoming a plaything. Suddenly, the reason why we buy one and run one has changed dramatically. In large part, this is due to the high COE.
Probably the greatest social inequality tool ever devised by the government, the less well off now have to pay more out of their pockets proportionately compared to the rich, to own a car. Comparatively, COE has hit the poor harder than it has hit the rich. The price of a Corolla Altis, for example, has risen by 58% from February 2011 to July 2012, while the price of an Audi A8L 3.0T Quattro has increased by only 11% in the same period. Proportionately, it seems that more expensive cars get taxed less – motivating aspirants to go for more and more expensive cars due to their comparative ‘value’.
What this means is that, the common man takes more loans to finance his new luxury car. With interest rates at all-time lows, this might seem to be an equitable situation, but the fact of the matter is that high car prices are just going to make the common man deeper in debt. They will be unfazed by the high price because they pay for it in instalments anyway. Who is going to stop them?
As much as we would like to believe that they will not get a car, the population will adjust around the prices and continue to do what they desire. Although high prices will deter people in the short-term, it is my view that in the long-term it won’t have a great effect on purchasing habits. Ownership of a car has become less of a necessity and more of a prestige. It is one of the things that nearly everyone aspires to have in life. Therein lays the problem – price no longer matters and the heart works above the head. It is not so dangerous for the wealthy, but for the general populace this is worrying indeed.
Widening the income inequality by way of higher interest payments for the lower income is a huge issue. Increasing the price of cars isn’t going to stop people from buying cars in the long-term, especially with attractive zero-interest borrowing schemes. Higher prices benefit nobody except the government. We will still face our traffic jams and our crowded car parks.
As long as the government believes in cost as a deterrent, there is no turning back. Cost of everything related to motoring will continue to increase unabated. But is this really a long-term solution?
Perhaps allowing people to own a car at a reasonable cost, while charging highly for its use, can be considered. Parked cars are less harmful to the public than cars being used. People’s desire to own an automobile can be satiated, while the main problem of their usage is curbed. The lower the price people pay for a car, the less they feel compelled to use it – which might actually reduce usage. Christopher Tan of The Straits Times commented that people will continue to use their cars more, and even more than ever before, with the current high prices. I agree with his view.
The inevitable point is that car costs are now exorbitantly high. The dangerous element is that we get used to it and continue to buy them. And, because we pay so much for them, we want to use them as much as possible. The problem of a large vehicle population remains unsolved. Perhaps some radical changes should be made soon before we sink deeper into the point of no return.