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1. OverviewWhen it comes to travelling, Singaporeans are spoilt for choice: one could pick between the bus, the train, private-hire services and, vehicle ownership. In view of government measures, this report discusses how the market (car owners, public transport commuters, car dealers and transport operators alike) react accordingly. 2. Car Ownership 2.1.1 Zero-Percent Car GrowthThe Land Transport Authority announced that Singapore’s vehicle growth rate will be cut to down to zero from February 2018 as Singapore heads to becoming a car-lite society. One reason for such implementation is the land constraints in Singapore. 12% of Singapore’s total land area is taken up by roads and there is little room for further expansion of the road network. To aid in the transportation of those who do not own a vehicle, the Singapore Government invested billions of dollars in its public transit ventures.However, with an increase in money income, will Singaporeans be more willing to take public transportation or private cars? It is human nature to want to flaunt one’s possessions, thus, despite government plans to expand and improve Singapore’s public transport system, Singaporeans might prefer having their own personal transportation to public transportation. This change in Singaporeans’ taste and preferences will cause the demand for public transportation (buses and trains) to decrease and hence a leftward shift of this demand curve. Zero growth means there will not be any additional cars unless the owners scrap them. There will still be new cars on the road with new COE every month because there will be cars that will reach 10 years and need to be scrapped. This means that Singaporeans can still buy pre-owned cars and new cars when owners scrap their old ones.Senior Minister of State for Transport, Josephine Teo, noted that as long as Singaporeans’ incomes continue to grow, “it is unlikely for private car ownership to be a low-cost transport option.”  This happens when Singaporeans’ have increased Money Income and are able to increase their demand for private cars. This will lead to an increase in the demand for cars and hence a rightward shift of the demand curve. With greater demand and the same supply of cars, the equilibrium price would be shifted upwards and the market price would therefore become more expensive. Just the determinants of supply and demand alone would already cause the equilibrium price of cars to increase, what more with Singapore’s plans to cut its vehicle rate to zero? The supply would be even more restricted as the government would be limiting the amount available for purchase.  However, the LTA mentioned that this adjustment is not expected to significantly affect the supply of COE, as the COE is determined largely by the number of vehicle de-registrations.  Therefore, although there may be a slight increase in COE, more of the total car price’s increase would be attributed to that of the car. This is due to the increased demand and decreased supply of cars and motorcycles. As the government restricts the supply, the number of sellers would fall as they would not be able to sell as many cars and this would cause the eventual supply of cars to fall. This would be shown as a leftward shift of the supply curve and a rightward shift on the market demand diagram.In the context of Singapore, with its many connected public transportations, owning a car is considered a luxury. The demand for a car is therefore price elastic and consumers are responsive to changes in price. With a relatively huge increase in price when the supply of cars is restricted, the demand would fall and the total revenue earned by sellers would fall as well.The growth rate for goods vehicles and buses in Category C will remain unchanged at 0.25 per cent until 2021. LTA said this is to provide businesses more time to improve the efficiency of their logistics operations and reduce the number of commercial vehicles they require. This will be helpful for Singapore in the long run as the demand for commercial vehicles would drop naturally as they are more efficient in their operations. Businesses would not have to lose profits and become less efficient due to a stricter restriction on commercial vehicles available to them. Becoming more efficient allows companies to generate more produce with fewer resource and would ultimately increase Singapore’s GDP. When the demand for commercial vehicles drops naturally, the restriction on the growth rate for such vehicles would not be seen to be as strict as compared to if their demand were to be forced down. This delay in the cut of growth of such vehicles also gives businesses time to think up of new ways as to how to cope once the cut is implemented. 2.2 Petrol PricesDespite a shrinking vehicle population, Singapore’s petrol consumption is rising. Singapore consumed about 3% more petrol in 2017 than in 2016. At the same time, Singapore’s vehicle population has dropped by about 2% since 2013. However, the private-hire vehicle population has quadrupled to more than 55,000. Due to a change in Taste and Preference, more people are leaning towards working under private-hire operators, Uber and Grab. Since the Price of Related Good, which in this case is taxi services under Grab and Uber, is lower, more people would opt for this substitute. Furthermore, taxi service is considered a luxury as many Singaporeans either own their own vehicle or would take public transportation. Therefore, the demand for taxi services are generally price elastic. Consumers would respond to changes in price of taxi services. Since operators such as Grab and Uber provide taxi services at a relatively lower price as compared to ComfortDelGro etc., the quantity demanded for taxi service would increase. More petrol would be consumed when there is higher demand for private-hire taxi services. This depicts an increased demand for petrol which would cause the equilibrium price of petrol to increase. Petrol, a necessity to all drivers and especially so for those whose job requires the use of a vehicle, is considered to be price inelastic. Consumers are generally unresponsive to price changes. Despite prices of petrol increasing, ( consumers would still purchase petrol as there is a need for them to do so in order for them to drive their vehicle. They would not reduce their spending of petrol just because of the increase in price.   3. Alternatives 3.1 Private-Hire Services: TaxisUber is revolutionary for public transport – pioneering a new sector in the transportation industry, its winner-takes-all strategy is aligned with its goal of becoming a monopoly. However, Uber still remains an oligopoly, with very few competitors (Lyft and Grab, to name them), and it has been reported to excessively spend to keep the discrepancy in its competitive advantage over them wide. It could be argued that its fight for dominance has only been made more challenging with its efforts to diffuse effects of scandalous claims (sexual harassment and toxic work culture) imposed on the company – giving rise to the fact it loses almost $1b every 3 months. Although Uber seems to be successful, its long-term profitability may be affected by its financial splurging. To counter this, they may have to rely on their prominent market power, its ability to set prices – translating into more expensive rides set at company-determined prices than at that determined by market competition. Repercussions for this oligopoly leader include government intervention.Turning the tables on Grab, it has been just as aggressive, swiping drivers at a whopping figure of over 2,000 from the largest Singaporean taxi operator – ComfortDelGro. Its strategy was to dangle enticing rental discounts during its recruitment drive. In defense, ComfortDelGro offered rental rebates too, although less attractive than those of Grab’s. ComfortDelGro must be decisive if it wants to survive the pressure being placed on it, matching up to Grab’s offer – although it is not sustainable and augur ill for customers in the long-run. Either that, or discuss plans to collaborate with Uber.Both Uber and Grab exhibit the spending of drastic amounts of money to become more competitive. In their quest to drive out competition and attain monopolism, their plans just might backfire in the long-run, placing them on a knife-edge.”the taxi-operations business is veering dangerously from oligopoly to perfect competition.After all, the products that operators offer are identical: Private, air-conditioned transport from Point A to Point B. It isn’t too difficult to get a private-hire licence or a rental car. Consumers are unlikely to have brand loyalty. They simply go for the cheapest price, once they are assured of safety. You can usually get smooth rides on a Toyota as well as an Audi.It is not perfect competition yet. Not everybody has perfect information about prices or access to Uber and Grab apps. And there’s an oversupply of rental cars.As the private-hire market consolidates, the uncomfortable truth is that ComfortDelGro has lost its cushy position in Singapore taxis.In the medium term, is the firm ready to operate a driverless taxi fleet? Or will it be disrupted by Google and the auto giants?This is not to say I won’t buy ComfortDelGro if I think the price is right. I still think its bus and rail businesses are rock-solid with growth potential.How much they are worth is a matter for debate. By a simplistic 20-times multiple of estimated net profit, the public transport segment might be worth S$1.20 a share. The rest of the businesses, excluding taxis, might be worth S$0.50.In a worst case scenario of a sustained taxi glut, ComfortDelGro investors can still sit tight on a “regulator-approved” cut of public transport oligopoly profits.There is cause for more caution. The world is in a low interest rate, low oil price, and high earnings multiple environment. That could change.”

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