Passenger car COE premiums advance

[SINGAPORE] Premiums for passenger car certificates of entitlement (COE) rose yesterday in the second tender of March.

Category A, for cars below 1,600cc and 130 hp, climbed $1,603 to $78,602, while in Cat B, which is for cars above 1,600cc or 130 hp, the premium spiked $2,190 to $82,900.

In Cat E, the open category which currently tracks Cat B, it went up $2,001 to $84,001.

In Cat D, which is for motorcycles, it was $288 higher at $4,289 while Cat C for goods vehicles bucked the trend by falling $2,411 to $53,891.

The sales director of a Japanese volume dealership said that he was unsurprised by the premium increases.

"Everyone has a new model. Toyota has the new Corolla Altis. Then there's the Mazda3, plus the Mercedes-Benz CLA180 and Audi A3. Even a little demand for each of them will push up COE premiums because the quota is too small to be spread evenly among so many players," he said.

Another possible reason for the surge, he suggested, was that some prospective buyers were afraid premiums may climb further during the next bidding exercise, which will come in three weeks.

The usual interval between tenders is two weeks, and an extra week usually inflates premiums because dealers would have had more time to run up additional bookings.

The end of Q1 may also have led some brands to bid more aggressively for COEs, given that it will soon be time to report quarterly sales figures to their principals.

The sales director said that he was also not surprised by the jump in Cat B premium because there are "many more brands" in this category who have the profit margins to "push up" premiums.

But he noted that buying interest had picked up only in the last few days, after a quiet week following the previous bidding exercise.

"In the first week, people were browsing and comparing prices. Business picked up only in the second week," he noted.

However, there is a group of people who are still unable to sign on the dotted line, he said, and these are the mass-market buyers for whom the current Cat A COE level is too high.

He said: "It seems they are still hoping and waiting for COE premiums to fall."

The sales director explained that most of these buyers expect vehicle de-registrations to go up in the second quarter, thus boosting subsequent COE quotas and deflating premiums.