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CERTIFICATE of entitlement (COE) premiums slumped across the board on Wednesday, led by the big car category in the first bidding exercise for the new and larger February-April 2016 quota.
Cat A - for cars below 1,600cc and 130 hp - tumbled S$4,650 to S$46,651 and Cat B - for cars above 1,600cc or 130 hp - crashed S$11,479 to S$38,610, or by nearly a quarter of its price two weeks ago.
Cat E - the open category which currently tracks Cat B - was down S$6,999 to S$44,001.
Cat C - for goods vehicles - was S$1,466 lower at S$45,036 while Cat D - for motorcycles - slipped just S$9 to S$6,503.
While some distributors had expected the Cat B premium to soften, they were surprised by the amount.
"It was completely unexpected,'' said the managing director of a luxury dealership.
One reason, he speculated, could be that the Chinese New Year rush is over. Another is the fact that the stock market has been ravaged.
"The number of COEs has also increased by about 200 pieces per tender," he added. "All these would have contributed to Cat B's fall."
As a whole, the February-April 2016 quota has 16.4 per cent more COEs than the previous November 2015-to-January 2016 period.
In particular, the number of Cat A certs available is up 22.5 per cent to 4,057 COEs per month, while Cat B gets 18.0 per cent more with 2,417 COEs.
Cat E rises 23.9 per cent to 892 COEs monthly, and Cat D is 9.0 per cent bigger with 713 COEs.
Only Cat C contracts 32.6 per cent to 324 COEs.
According to the managing director, there is still a "steady stream" of Cat B orders. To back up his claim, he pointed to the number of bids in Wednesday's tender, which was higher than in the previous round.
He said: "That means bidding strength was soft and it could perhaps be that dealers with orders are unable to deliver cars just yet due to low stock levels.''
As for Cat A, the premium did not sink as much despite the increase in quota because "there is still some support", said the senior manager of a popular Japanese dealership. "There is a backlog of orders from last month,'' he explained.
But the economic uncertainty and Chinese New Year period are definitely behind the lower Cat C premium despite its one-third cut in allocation.
One commercial vehicle dealer said demand is "generally weak'' because of poor business sentiment.
This, he said, has also affected the ETS take-up rate, which recently slowed down. Under ETS or the Early Turnover Scheme, owners of older diesel vehicles are incentivised to replace them with cleaner Euro V models without having to bid for a COE.
He added: "Business owners are also busy with other activities over Chinese New Year, and buying a new goods vehicle is not on their list of priorities. I believe all these reasons played a part in bringing the Cat C premium down.''