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Goods vehicle COE premiums soar 20%

With next month's supply cut, one dealer believes it may hit S$55,000
Thursday, July 24, 2014 - 06:00

[SINGAPORE] PREMIUMS for certificates of entitlement (COE) rose across the board yesterday, with those for commercial vehicles jumping 20 per cent ahead of a big quota reduction from next month onwards.

In the final bidding exercise for the May to July 2014 quota, passenger car premiums climbed slightly. Category A - for cars below 1,600cc and 130 hp - was S$900 higher at S$62,890, while Cat B - for cars above 1,600cc or 130 hp - inched up S$112 to S$65,001.

Cat E - the open category which currently tracks Cat B - was up S$2,001 to S$65,002.

Meanwhile, Cat D - for motorcycles - advanced S$251 to S$4,252.

But it was Cat C - for goods vehicles - that posted the biggest increase among the categories; it shot up S$8,620 to S$52,010.

The spike, however, was not completely unexpected. Last week, it was announced that the next August to October 2014 quota would have 33.1 per cent fewer Cat C COEs, or one-third. This translates to 515 a month, or fewer than 260 pieces per tender.

"That is too little for the whole market," says the sales director of a mid-sized commercial vehicle dealership.

"ETS can only help existing owners who want to upgrade," he added, referring to the successful Early Turnover Scheme, under which a buyer of a commercial vehicle does not have to bid for a COE but instead pays a pro-rated COE based on the prevailing quota premium. "New buyers who do not have an existing vehicle cannot take advantage of ETS."

Based on the current situation, the sales director says he believes the Cat C COE premium may rise to S$55,000 or more next month.

"And if the Cat C quota continues to be cut further, goods vehicle premiums will be as high as passenger car premiums," he says.

As for the Cat A and B premiums, they are "flat" because sentiment is "no good", according to the managing director of a large dealership.

"There's no interest," he says. "The stock market is not moving, so people can't make money there. And many retailers are feeling the pinch because of fewer Chinese tourists."

Even the launch this week of the new Mercedes-Benz C-Class may have limited impact.

"The C-Class is a popular model and many people have been looking forward to its arrival," he says. "It will definitely spark a lot of interest but because the overall market is weak, I don't think it will affect premiums much."

The extra COEs for the small and big car categories from next month onwards should also temper any upward pressure. From August to October, Cat A and B will enjoy a 13.1 and 4.6-per cent increase in COEs respectively. But the number of Cat E COEs will contract by 18.4 per cent.

Analyse historical COE data with the Business Times' interactive tool at http://btd.sg/coetrack

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