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COE premiums end 2015 mostly lower

Some car distributors are taken aback by the sharp S$5,000 fall in Cat B

Distributors had expected COE premiums to soften due to slower showroom traffic in the past two weeks and higher cost of a car loan.


CERTIFICATE of entitlement (COE) premiums mostly slumped in the last bidding exercise of 2015, with the big car category shedding nearly 10 per cent to an over four-and-a-half-year low.

Category A - for cars below 1,600cc or 130 hp - was down S$2,688 at S$54,301. The last time Cat A was lower was in February 2012, or nearly four years ago.

Meanwhile, Cat B - for cars above 1,600cc and 130 hp - fell S$5,000 to S$55,001. In April 2011, the big car premium had also settled at this exact amount.

Cat E - the open category which currently tracks Cat B - slipped S$2,502 to S$57,501.

Cat C - for goods vehicles and buses - dropped S$2,100 to S$46,001.

Only Cat D - for motorcycles - was S$99 higher at S$6,600.

Most car distributors had expected COE premiums to soften but some were taken aback by the sharp dip in Cat B.

"The Cat A adjustment remains within expectations because we figured it would drop by about S$2,000 to S$3,000 as the market has been quiet," said the sales director of a luxury dealership. "But we were surprised that it was much more for Cat B."

He said that there had been some indication that premiums would slide. "Showroom traffic in the past two weeks had slowed down with many people away on holiday," he explained.

Another factor is the higher cost of a car loan. Last week, two big players, Hong Leong Finance and DBS, officially raised interest rates to 2.78 per cent for the maximum five-year tenure.

Yet, the sales director was curious about the relatively big drop in Cat B, given that the top luxury make Mercedes-Benz is said to be enjoying good demand.

He said the brand with the three-pointed star has "a steady stream of orders", which is supporting the market.

For an idea of Mercedes-Benz's popularity, there is a six-month waiting period for a C-Class booked today, while the CLA-Class has a March delivery date.

Looking ahead, Wednesday's COE results are likely to result in "a fresh influx of buyers", according to George Lee, general manager of Alpine Group, which distributes Opel and Chevrolet.

But he believes 2016 will not see premiums bouncing back up to 2015 levels.

Mr Lee added: "Based on potential deregistrations, they should continue to be on a slight downtrend."