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CNA
26 minutes ago
- CNA
Analysis: How mounting losses and an ageing fleet could have sparked BlueSG's 'strategic pause'
SINGAPORE: BlueSG's move to suspend operations were likely influenced by losses caused by an ageing fleet, but its brand could take a hit from such a move even as the Singaporean car-sharing service plans a return in 2026, experts say. The firm on Monday (Aug 4) announced a sudden "strategic pause" of their electric vehicle (EV) point-to-point car-sharing operations starting from Friday, as it works to upgrade its infrastructure. BlueSG will also be laying off a portion of its workforce, though it did not state how many will be affected. Its new service will involve a new platform, a refreshed fleet with a new range of vehicles, an expanded network of pickup and drop-off points, as well as "greater reliability and a smoother user experience", the company said. BlueSG is the only car-sharing platform that offers point-to-point services in Singapore. 'They could have just continued operations and added the right vehicle fleet mix and changed policies and so on,' said Associate Professor Walter Theseira at the Singapore University of Social Sciences. 'But my suspicion is that they must have concluded that the cost of continuing to keep the fleet in operation as well as operating costs just vastly outweighed any benefit in (operating for) the next couple of months,' he added. 'It was better to draw a line underneath this and then change everything.' Agreeing, Associate Professor Jawn Lim from the Singapore Institute of Technology likened BlueSG continuing operations while revamping infrastructure to 'moving into a half-renovated home'. 'The issues from an incomplete and dusty interior could be more disruptive than waiting until the renovation is fully completed and cleaned,' he said. 'There may be more costs incurred to maintain the current BlueSG service than taking the 'strategic pause'.' BlueSG's annual financial statement from the Accounting and Corporate Regulatory Authority (ACRA) website showed a net loss of S$31.1 million (US$24.2 million) between January 2023 and March 2024. This was after a net loss of S$11.4 million between January and December 2022. Auditor EY noted that the company had changed its financial year end from December 2023 to March 2024 - and that the figures were "not entirely comparable" as they now covered a period of 15 months instead of the previous 12-month stretch. The accounts for the financial year ending March 2025 are not available yet. Founded in 2017, BlueSG was sold in 2021 to Goldbell, a local vehicle leasing company. Goldbell announced then that it would be investing S$70 million in BlueSG, and even expressed hopes for overseas expansion. According to its financial statement, Goldbell recorded a profit of S$24.2 million between April 2021 and March 2022; and S$6.2 million between April 2022 and March 2023. But between April 2023 and March 2024, it recorded a loss of S$3.4 million. Asked by CNA about the move to suspend operations and the role played by mounting losses, BlueSG CEO Keith Kee said the decision 'stems from a forward-looking review of how best to meet the evolving demands of shared mobility in Singapore'. While pausing operations could help save costs, intangibles such as consumer trust in the BlueSG brand could be hurt, said Professor Lawrence Loh, director of the Centre for Governance and Sustainability at the National University of Singapore (NUS). 'Whether they are upgrading or not, a total stoppage will result in lost revenue, lost users and given the layoffs ... it will have an impact on the credibility of the company,' he said. Mr Kee said 'serious consideration' was given to keeping the BlueSG service running while rebuilding in parallel. 'But (we) ultimately recognised that this would divide our efforts and risk further disruptions for users,' he added. 'Taking a short, planned pause now gives us the focus needed to return faster - and stronger.' "DOUBLE WHAMMY" BlueSG founder Franck Vitte, who served as the firm's managing director until 2021, told CNA he believes the firm's transition to a new IT system in 2023 proved to be more challenging than anticipated. The new system had led to disruptions and left users frustrated over issues such as difficulty ending rentals. It is possible that back then, BlueSG needed to 'completely redesign its system architecture to enhance customer service and achieve financial sustainability', said Mr Vitte, who is now the MD of TotalEnergies, BlueSG's charging network. 'At the same time, its vehicle fleet was ageing, and maintaining the Bluecars had become increasingly difficult, particularly since production of the model ceased several years ago." Mr Kee, the CEO, said: 'When we first took over the service, we inherited a legacy system. A major milestone for us was the successful migration to a more robust, insight-driven backend - which allowed us to stabilise operations and deliver steady growth in subscriptions and rentals. 'That migration also revealed the limitations of the existing infrastructure - especially as new technologies emerged and demands accelerated,' he added. 'It became increasingly clear that a full platform upgrade was needed to meet future demands with greater agility, efficiency and scalability.' Associate Professor Raymond Ong from NUS also pointed to fast-developing advancements in the EV landscape, and how that combined with an ageing fleet for a 'double whammy' for BlueSG. Charging points have since become more widespread islandwide, yet BlueSG cars can only be charged at specific stations. This puts a lot of cost pressure on the firm, said Assoc Prof Ong. 'It could be better for BlueSG to work with a power company to come up with a better funding mechanism for their charging infrastructure,' he said. 'All this has to be looked into as the EV market is changing so fast.' He also noted that BlueSG's ageing cars now have shorter range compared to newer EVs. The company did attempt to refresh its fleet in 2022, by adding 500 Opel Corsa-e cars. Assoc Prof Theseira said this could have been a misstep. 'For whatever reason, they decided to go with a European model instead of going for, for example, a Chinese model, which everybody knows is not only enjoying a lot of popular support in Singapore, but is also likely to be cheaper,' he said. IS THERE DEMAND? The abrupt cut-off of BlueSG operations will be felt by its thousands of users. On one community Telegram Channel, news of the pause led to several users leaving notes of appreciation, citing how they had come to rely on the service. Some hoped BlueSG would come back stronger next year. Prof Loh from NUS believes BlueSG users will likely turn to other car-sharing firms or fall back on ride-hailing - possibly even causing temporary price increases in those services. 'If demand is more than supply, there could be potential for price increases (and) more surge pricing (during peak hours),' he said. Assoc Prof Theseira had a different view. 'If (BlueSG) had embarked on this move, they must have seen from the operating numbers that basically, demand was not there, or not there to sustain operations,' he said. 'So what is the effect, then, of removing what is now a more marginal player with depressed demand? Not much effect, right?' 01:11 Min IS THE BLUESG MODEL TENABLE? As Singapore's only point-to-point car-sharing service, BlueSG's pause has invited questions of whether the model is sustainable at all. Assoc Prof Theseira called the point-to-point modality the 'holy grail' of car-sharing - because it opens up to a much larger market, compared to one where rented cars have to be returned to the same place. 'But the problem here is that point-to-point also requires a sufficient density in your network, as well as systems - both operating and pricing-wise - to actually encourage proper circulation of cars,' he said. He likened BlueSG's issues to those faced by bicycle-sharing firms - where the vehicles do not always spread themselves across the island evenly, due to demand patterns. For instance, in Singapore people typically work, play and live in distinct areas. This means that BlueSG cars in use are typically moving from one place to another, rather than circulating. 'Who comes (to a Housing Board estate) to work or play? Everyone in those estates goes to work and play in the town area,' said Assoc Prof Theseira. This differs from cities like Tokyo, where its suburbs are a mix of residences, workplaces and leisure spots. 'Somebody may live in part A of Tokyo and go and play or work in part B; and somebody who lives in part B might go and work or play in part A,' said the transport economist. In general, the car-sharing market is difficult to sustain, as also seen in other parts of the world, he pointed out. Earlier this year, US car-sharing firm Getaround abruptly shut down operations, citing financial difficulties. In 2018, French point-to-point EV car-sharing firm Autolib also ceased operations after chalking up major losses. Despite the current headwinds, former BlueSG executive Vitte hopes the firm he founded can bounce back. 'I believe that car-sharing has a natural place, especially in a city like Singapore, where it perfectly complements the existing transport options,' he said. 'I remain hopeful and confident that a new car-sharing service will emerge in the coming months, one that applies the lessons of the past to deliver a high-quality experience for Singaporean commuters.'
CNA
26 minutes ago
- CNA
Higher US tariffs take effect on dozens of economies
WASHINGTON: Higher US tariffs came into effect for dozens of economies on Thursday (Aug 7), drastically raising the stakes in President Donald Trump's wide-ranging efforts to reshape global trade. As an executive order signed last week by Trump took effect, US duties rose from 10 per cent to levels between 15 per cent and 41 per cent for a list of trading partners. Many products from economies like the European Union, Japan and South Korea now face a 15-per cent tariff, even with deals struck with Washington to avert steeper threatened levies. But others like India face a 25-per cent duty - to be doubled in three weeks - while Syria, Myanmar and Laos face staggering levels at either 40 per cent or 41 per cent. The latest tariff wave of "reciprocal" duties, aimed at addressing trade practices Washington deems unfair, broadens the measures Trump has imposed since returning to the presidency. But these higher tariffs do not apply to sector-specific imports that are separately targeted, such as steel, autos, pharmaceuticals and chips. Trump said Wednesday he planned a 100-per cent tariff on semiconductors - though Taipei said chipmaking giant TSMC would be exempt as it has US factories. Even so, companies and industry groups warn that the new levies will severely hurt smaller American businesses. Economists caution that they could fuel inflation and weigh on growth in the longer haul. While some experts argue that the effects on prices will be one-off, others believe the jury is still out. With the dust settling on countries' tariff levels, at least for now, Georgetown University professor Marc Busch expects US businesses to pass along more of the bill to consumers. An earlier 90-day pause in these higher "reciprocal" tariffs gave importers time to stock up, he said. But although the wait-and-see strategy led businesses to absorb more of the tariff burden initially, inventories are depleting and it is unlikely they will do this indefinitely, he told AFP. "With back-to-school shopping just weeks away, this will matter politically," said Busch, an international trade policy expert. DEVIL IN THE DETAILS The tariff order taking effect on Thursday also leaves lingering questions for partners that have negotiated deals with Trump recently. Tokyo and Washington, for example, appear at odds over key details of their tariffs pact, such as when lower levies on Japanese cars will take place. Washington has yet to provide a date for reduced auto tariffs to take effect for Japan, the EU and South Korea. Generally, US auto imports now face a 25-per cent duty under a sector-specific order. A White House official told AFP that Japan's 15-per cent tariff stacks atop of existing duties, despite Tokyo's expectations of some concessions. Meanwhile, the EU continues to seek a carveout from tariffs for its key wine industry. In a recent industry letter addressed to Trump, the US Wine Trade Alliance and others urged the sector's exclusion from tariffs, saying: "Wine sales account for up to 60 per cent of gross margins of full-service restaurants." NEW FRONTS Trump is also not letting up in his trade wars. He opened a new front Wednesday by doubling planned duties on Indian goods to 50 per cent, citing New Delhi's continued purchase of Russian oil. But the additional 25-per cent duty would take effect in three weeks. Trump's order for added India duties also threatened penalties on other countries that "directly or indirectly" import Russian oil, a key revenue source for Moscow's war in Ukraine. Existing exemptions still apply, with pharmaceuticals and smartphones excluded for now. And Trump has separately targeted Brazil over the trial of his right-wing ally, former president Jair Bolsonaro, who is accused of planning a coup. US tariffs on various Brazilian goods surged from 10 per cent to 50 per cent Wednesday, but broad exemptions including for orange juice and civil aircraft are seen as softening the blow. Still, key products like Brazilian coffee, beef and sugar are hit.
CNA
26 minutes ago
- CNA
Japan's Topix hits record high on Wall Street rally, solid earnings
TOKYO :Japan's Topix index touched a record high on Thursday, tracking strong overnight gains on Wall Street, while solid corporate earnings from domestic firms reinforced expectations of wage growth. The broader Topix was up nearly 1 per cent at 2,993.14, as of 0206 GMT. Earlier in the session, the benchmark index hit an all-time peak of 2,993.21. The Nikkei climbed 0.9 per cent to 41,151.07. Both indexes were on track for a third consecutive session of gains, provided the current momentum holds. The three-day rally follows a sharp decline on Monday, when the Nikkei posted its largest drop in two months amid growing concerns over the U.S. economy and trade. "The market is now convinced that the U.S. economy will not slow down," said Hiroyuki Ueno, chief strategist, Sumitomo Mitsui Trust Asset Management. "That is important for the Bank of Japan's decision process for raising interest rates. With solid corporate earnings results and a trend for wage increases, the market now expects the BOJ to raise rates by the end of the year," Ueno said. However, government data released on Wednesday indicated that Japan's real wages fell for a sixth consecutive month in June, as inflation continued to outpace pay growth. The trend clouded the outlook for a BOJ policy shift, with wage growth seen as a key indicator for sustainable inflation. There is growing expectation that the U.S. Federal Reserve could begin cutting interest rates as early as September to support the economy. Shares of Mitsubishi UFJ Financial Group rose 1.8 per cent, providing the biggest boost to the Topix, while Sumitomo Mitsui Financial Group gained 1.56 per cent. M3's shares surged 22 per cent after Goldman Sachs raised the target price for the medical services platform operator to 2,300 yen from 2,250 yen. Cosmetic maker Shiseido jumped 10 per cent. Chip-making equipment maker Tokyo Electron fell for a third day, falling 2.7 per cent on Thursday to weigh on the Nikkei the most. Chip-testing equipment maker Advantest fell 0.7 per cent. Shares of chipmakers declined on concerns over a potential slowdown in global chip production after U.S. President Donald Trump said Washington would impose a tariff of about 100 per cent on semiconductor chips imported from countries not producing in America or planning to do so.
