Buying a brand new car- the minimum considerations

A car is expensive and hearing horror stories about car dealers, it is best to be armed with knowledge and information when dealing with them. I don't like cars, i hate them but due to circumstances my family needs it and having to buy one due to the old one ending its 10 year lifespan gives me some motivation to learn more about it, not so much about the specifications of the car but more of the money side like OMV, Tiered ARF,Parf, CEV e.t.c. Thanks to the Land Transport Authority, they have tremendously increased transparency to car buyers.

What a beauty!Zipping through the urban jungle without the care of the opinions of the world ( everything is blurred in the background to depict this.)

What i have learnt:

1) From onemotoring, LTA has provided the breakdown on the cost of each car model. (check the bottom of the page).With this, one can easily find out the  basic cost of the car without COE, thus finding out the gross margin of the authorised distributers(ADs). Note, only the list for ADs are available, not parallel importers(PIs) . Use this list to bargain down the price.

2)So what if i want to buy a model from a PI which is not found on the list. It is easy to calculate the basic cost without COE, just using excel and key in the formulas shown. You have to ask the PI for only 2 information, the CEV and the OMV.

Excise duty - This is 20% of OMV.

GST- This is 7% of the sum of excise duty and OMV.

Tierd ARF payable -

CEV - This stands for carbon emissions-based vehicle scheme. 

If your car is less pollutive, there is a rebate, which you can offset your Tiered ARF payable. Put a negative CEV value in the CEV field.

If your car is pollutive, there is a surcharge which you need to add to your Tiered ARF payable.Put a postive value in th CEV field.

Net ARF (after CEV) - this is what is added to the basic car cost. This is also used to calculate the PARF rebate at the 10 years mark. The lowest the Net ARF can go is $5000.

Regn Fee- This is a flat $140

3) Don't forget the road tax! You can use the road tax calculator provided by our wonder LTA.

Interestingly, petrol cars have the least road tax. Road tax for petrol is slightly lesser than CNG which is much much less than diesel. Diesel is bullshit man. Unless you drive damn lot like a taxi driver, its not worth it to buy a diesel one as the savings in fuel is not enough.

4) Due to the value conscious streak in me, i don't give a damn about features, brands nor about new or old models. I care about practicality. Don't go for the cheapest car as the cheapest car may cost more than a more expensive car due to the existence of the PARF rebate at 10 years. Instead, calculate the annual depreciation, INCLUSIVE of road tax for the period up to 10 years. My friend actually bought a used Porsche Cayenne and it was actually cost-wise comparable to a Toyota as the Porsche PARF rebate was far greater than the Toyota's. I will omit fuel efficiency as a consideration as there is too much variables in this metric.Besides, can you really trust the fuel numbers?

I can then use annual depreciation, inclusive of road tax to compare with all the cars, including used cars and make a more informed decision. 

PARF rebate - this is 50% of the Net ARF(after CEV) at the end of 10 years.

5) Now, should i bid for my own COE? It's just a $2 admin charge and a $10000 deposit, refundable 1 working day after the Wednesday bidding. I can then ignore those confusing 6 bid,3 bid non-guaranteed, guaranteed,top-ups,no top-ups and various other jargon meant to muddle one's decision. 

Based on the list showing the breakdown of car cost as mentioned in point 1 above, it seems whether bidding your own COE is worth it or not depends on which brand of car you buy. Generally it seems if you want to buy Hyundai, Ssanyong,Volvo, Renault and certain Audi models, bidding own COE could save $2k-3.6k. For Japanese cars, like Toyota ,Honda, Subaru e,t,c, it is not worth it as the ADs jack up the price.

Now do take note that this is just based on a list that keeps getting updated.

6) Based on the list(again), continental cars have a gross profit margin for the ADs of between 40k - 174k! While non-continental cars(exclude Toyota's Lexus) have a gross profit margin of between 7k-50k. Continental car sellers better give me the MOON if i ever buy from you man. My expectations of every service quality aspect will be damn damn high for the margins you charge!

Now the one thing that i am lack of data at the moment is about car loans and car insurance referral earnings of the ADs and PIs. Normally, paying the full sum in cash should be cheaper, but due to this murky system of loans and insurance, it seems paying the full sum in cash is now more expensive. This really irks me as i can't have a peace of mind without knowing this.The digging continues.....

Virgin purchase of H-share Index ETF-2828:HK

Ever since the china stock market bubble and its subsequent crash correction i have been toying with the idea of thinking how i can unleash my greed. In a moment of absolute folly, i changed a sum of money into HKD without understanding the Hong Kong Stock Exchange, worse still, i didn't check the exchange rates given by my broker. Now i'm stuck with HKD with the broker with no interest given and just thinking about changing it back into SGD with their  lousy exchange rates puts me off. Better to see the glass half full now and thinking about what i learnt with this 'play' money.

• Hong Kong stock exchange really sucks man. Their board lots are different for its different shares. Now i know 2828:HK has a board lot of 200 shares, 00005:HK (HSBC) a board lot of 400 shares e.t.c.See convoluted exchange
• Hong Kong stock exchange don't have live prices, giving 15 minutes delayed prices. See super convoluted exchange. I have to go to aastocks to get live prices instead.

Anyway, i really hate adding another variable ( currency) into my speculations investing. I need things really simple as my IQ isn't high and i can't think fast enough and most importantly i'm immensely risk averse. But a trip to a particular toilet cubicle changed my life as i stared at this phrase scribbled in ink 'a life lived without risks pretty much wasn't worth living'  for 15 minutes. Damn this phraseee!!!

Looking at the AH Premium index, the mainland A-shares (only for domestic China citizens to purchase who are made up of mainly retail investors) is trading at a hefty 30ish% premium to the H-shares (shares that the international community like you and me can buy) for the same group of companies. Historically the premium for A-shares is roughly a 5ish%-10ish premium to the H-shares and there are times where H-shares trade at a discount to A-shares, below the 100 level. 

So what are the possibilities?

1. H-shares rise  (A-share fall or stays the same)
2. H-shares fall by a small amount( A-share must capitulate, crash and burn to narrow the premium)

Well the above is just pure speculation based on price and the theory of mean reversion of prices. Anyway, since i have HKD AND H-shares index having a P/E ratio of only 7.77 and a dividend yield of 3% ( better than an interest of 0% on my dead HKD with my broker) and no dividend withholding tax on this 2828:HK. Heck lah..just buy.

Now, what to do with the remaining dead HKD?