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Big car COE premium jumps 22% after surprise fall last round

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AS EXPECTED, the premium for a big car certificate of entitlement (COE) shot back up on Wednesday, the second bidding exercise in February, after its surprise fall two weeks ago.

Singapore

AS EXPECTED, the premium for a big car certificate of entitlement (COE) shot back up on Wednesday, the second bidding exercise in February, after its surprise fall two weeks ago.

Category B - for cars above 1,600 cc or 130 hp - spiked S$8,360 or 22 per cent to S$46,970. Cat B had shed S$11,479 in February's first bidding exercise.

Cat E - the open category which currently tracks Cat B - was S$1,008 higher at S$45,009.

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But Cat A - for cars below 1,600 cc and 130 hp - slipped S$3,651 to S$43,000.

Cat C - for goods vehicles - was S$35 lower at S$45,001, while Cat D - for motorcycles - was down S$150 to S$6,353.

Dealers were not surprised by the rise in Cat B and fall in Cat A. "The Cat B premium was S$8,000 lower than Cat A, so many prospective Cat A buyers moved over because prices narrowed, making bigger models look comparatively cheaper," explained Sebastian Sim, Cycle & Carriage manager for the company's Mitsubishi brand.

He added that after the fall in the Cat B premium two weeks ago, car distributors had cut their prices. As a result, the number of Cat B bids during Wednesday's tender shot up.

"With everyone rushing in to buy a Cat B car, the number of bids received was nearly 3,000 - an 80 per cent jump," said Mr Sim.

Nicholas Wong, general manager of authorised Honda distributor Kah Motor, called the increase in the big car category a "natural rebound".

"Everyone was focused on Cat B; and for those people who had been waiting, they saw the opportunity to enter the market," he said.

He attributed the fall in Cat A to "fewer bookings" due to affordability issues. "Many people are still holding back because they are still not comfortable with the level of the premium," explained Mr Wong. "These include those people who may have scrapped their cars and are currently renting while waiting until they can enter the market again."

As for the Cat C premium which remains flat despite the goods vehicle quota contracting by 32.6 per cent for the current February-April 2016 period, some dealers pointed to the success of ETS or the Early Turnover Scheme.

"The Cat C premium is stagnant because the take-up rate for ETS is still good," said a dealer. "It is cheaper to buy a new commercial vehicle under ETS than to get a new COE."

Under the scheme, owners of older diesel vehicles are incentivised to replace them with cleaner Euro V models by paying the prevailing quota premium (PQP). No bidding for a COE is required, and there is a discount against the bonus COE period from their old vehicles.

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