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VEHICLE certificate of entitlement (COE) premiums fell across all car categories in the latest round of bidding on Tuesday, as demand for cars failed to match the increase in quota.
COEs for Category A, for cars below 1,600 cc, tumbled the most - from S$62,002 to S$57,199.
Category B COEs, for cars above 1,600 cc, fell to S$66,751 from S$70,890 two weeks ago.
The open category E, which can be used for any car type but is largely used for bigger cars, also went down, from S$71,921 to S$67,901.
The COEs for commercial vehicles in Category C and those for motorcycles in Category D bucked the trend and rose. Category C premiums went up from S$52,101 to S$53,202; premiums for Category D rose from S$5,504 to S$5,800.
Ron Lim, general manager of Tan Chong Motors, referring to the dip in premiums for cars, said: "The market is having difficulty getting enough demand in to support the supply. Whether this will continue to pan out is a question mark."
The market is expecting a substantial increase in COE quota, with 11,298 COEs available to car buyers in the February-to-April period, according to figures from the Land Transport Authority in January.
This is more than double the supply for the same period last year, and 23 per cent more than in the previous three months.
At the same time, a jump in the number of car deregistrations for both bread-and-butter models and luxury cars in January has not translated into demand, said Mr Lim.
About 3,000 cars Category A cars were deregistered last month, down from an average of about 2,000 in the last quarter; the number of Category B cars taken off the roads also went up, from an an average of 1,500 in the last quarter to 2,000 in January, said Mr Lim.
The lacklustre demand could be a result of the financing restrictions in place; car buyers could also be holding back to see how COE premiums play out, he said.
Michael Wong, director and general manager for Triangle Auto, said that with commercial vehicles, the quota had been unable to satisfy demand; he predicted that demand for such vehicles will stay strong with the current COE prices. "For commercial vehicles, COEs in the S$50,000-plus range will be a value that consumers can take; if it goes beyond S$60,000, you'll see a slowdown," he said.