Chapter 113 Question 102

Why do luxury cars account for a higher percentage of cars sold in Singapore than in the US? (Jacqueline Qin) Singapore's per capita income is about one-third lower than that of the United States, and the income distribution of the two countries is basically the same.But BMW, Mercedes and other luxury car makers have a higher market share in Singapore.Why do Singaporeans prefer to buy luxury cars? Due to Singapore's high population density, the country's government has taken drastic measures to limit car pollution and traffic congestion.For example, the country has an efficient public transport system and charges large license fees for cars.For the above purposes, Singapore's car license fees have three important features.One is that it is very expensive, more expensive than the pre-tax price of the most luxurious cars; the other is that the license fee is largely irrelevant to the price of the car purchased.Whether you buy a BMW 745i or a Honda Cicheng, the license fee is the same, even if the BMW is five times more expensive than the Cicheng; third, the license fee for an old car is more expensive than a new car, because the pollution control technology of cars has been steadily improving improve.By charging high license fees for old, polluting cars, the government encourages drivers to buy new, less polluting cars.

High license fees make the proportion of Singaporeans owning cars much lower than that of the United States.Low- and middle-income Singaporeans mainly rely on the public transport system, and only relatively wealthy people own private cars.Another result is that in the United States, buying a luxury car is generally five times more expensive than buying an economy car, but in Singapore, with the license fee included, the price of a luxury car is only less than three times higher than an economy car. Overall, license fees for older cars have skyrocketed, explaining why Singapore has a higher proportion of new cars on roads than the US.High license fees, which only the rich can afford, combined with the relatively lower price of luxury cars (including license fees) compared to economy cars, explain why the high proportion of new luxury cars on Singapore's roads.