Foucault has been trying to sell his 2014 Audi Q5 in Hong Kong but hasn’t gotten offers he considers good enough. — Bloomberg
HONG KONG: If you’re wondering about the best place in the world to buy a car right now, just look at Hong Kong.Even as second-hand vehicle prices break records in the US and other countries, people here are struggling to offload their cars as a surge of residents move out of the city after two years of punishing Covid restrictions.
The average reference price for a used car in Hong Kong fell 6% in the first quarter of 2022 compared with the same period a year ago, excluding vehicles over HK$1 million (RM538,000), based on a Bloomberg analysis of data from online dealership Hong Kong Motor City, the largest used-vehicle centre there.
Although the average price can vary widely from month to month, the general trend shows that it peaked in the third quarter of 2021, then dropped 13% in the final three months of the year compared to the previous quarter, and 10% so far in 2022.
“This is really unprecedented,” said Thomas Siu of Vin’s Motors, a used-car dealer in the city’s North Point district. “There are just too many cars to offload.”
In other parts of the world, prices for both new and used vehicles are being driven up by supply chain delays, computer chip shortages and increased demand.
And indeed, car prices were rising in Hong Kong until about six months ago. Not anymore. Restrictions put in place after Covid-19 suddenly took hold in the city, as well as Beijing’s increasing influence, have led many to decide their time in the Asian financial centre is over.
Lagging behind
Hong Kong has already recorded more than 160,000 departures this year through March 28, almost six times the net outflow for all of 2021, according to data from the immigration department.
One popular destination for people leaving Hong Kong is Singapore, where the cost of owning a car continues to rise.
The government in the island-state keeps tight control over the number of vehicles on the roads, requiring residents to buy special permits just to be able to drive.
The price of those permits hit a fresh record in March, and the overall cost of private transportation was up 18% in February, according to SGCarMart.com.
Singapore is where Guillaume Foucault, 39, wants to go. The senior tech manager in Hong Kong has been trying to sell his Audi Q5 2014 for weeks but can’t bring himself to let it go at the prices he’s seeing.
He bought the SUV for HK$156,000 (RM84,000) in May 2020 and put it up for sale online for HK$125,000 (RM67,000). He’s only been getting offers below HK$80,000 (RM43,000).
“I’m a bit of a car aficionado, and have bought and sold many cars in my life, always securing good deals,” Foucault said. “It’s hard to accept that I have to sell this car at a such a low price.”
Caroline Lherbier, a 41-year-old tax lawyer from Lille, France, left Hong Kong earlier this year because she got worried she might get separated from her two children for three weeks should one of them test positive for Covid.
“They put people in these sorts of camps,” she said. “It’s terrible.”
So she just decided to move out, leaving behind in the parking lot a 2017 MINI Cooper she bought in 2018 for HK$135,000 (RM73,000). She wasn’t sure if she could get HK$40,000 (RM22,000) for it at this point, though some similar vehicles were listed for sale for more.
“I didn’t have a luxury car, so I didn’t mind,” she said. “Prices dropped so much that my car wasn’t worth much anymore anyway.”
For Siu, the number of people calling him every day to try to sell their cars back to him is a first in his 40 years in business. “We get dozens of calls every day,” he said. “I’ve never seen anything like this.”
The number of new cars and of first-time buyers registered this January in Hong Kong was 2,068, the lowest since August 2020, the first time that data was recorded, according to the Hong Kong Transport Department.
The resulting drop in prices stands in stark contrast to the rest of the world. Used-car prices in the US were up 41% in February from the previous year, according to the US Bureau of Labour Statistics.
“Everywhere around the world, we’ve seen this situation the past two years of huge upwards pressure on car prices due to the pandemic,” said Rebekah Young, economist and auto industry expert at Canada-based Scotiabank.
A buyers market
“For Hong Kong, it looks like the opposite is happening.”
For those in Hong Kong looking to leave, getting a good deal on their car has become impossible.
“The closest we’ve ever had to a situation like this was the SARS epidemic in 2003, but this time prices aren’t rebounding,” said Siu, who currently has 150 cars for sale and about the same number in inventory.
Since the start of the year, Siu’s already bought 50% more vehicles than he has in the last three months of 2021. “We just pick and choose the best deals and hope that our margins will one day recover.”
Once-prized models are now selling at a bargain.
A used Tesla Model X was worth on average HK$553,000 (RM298,000) in February, down 15% from five months prior, according to Hong Kong Motor City sales data.
A BMW M5 from 2012 with 107,000km on its meter was selling for HK$248,000 (RM134,000) in January, while a car of the same model with similar mileage was priced at HK$308,000 (RM166,000) just three months earlier.
For some, dealing with the drop in prices has simply meant biting the bullet.
Koby Karp, 37, decided to rejoin his family in France, ending his three-year stay in Hong Kong after Covid restrictions made life difficult. He sold his Mercedes-Benz GLC 250 earlier this month for HK$182,000 (RM98,000). He had bought the car in June for HK$260,000 (RM140,000), but agreed to the much-lower price when he couldn’t find a private buyer.
“Everybody’s leaving Hong Kong so nobody wants to buy a car,” the founder of an NFT-data analytics company said.
“The only people buying cars in Hong Kong at the moment are car dealers.”
