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More Cat A cars with lower OMV after recategorisation
A YEAR after the reclassification of certificate of entitlement (COE) Category A, more small cars that cost less have been registered. Cat A used to be only for cars of below 1,600 cc, but since February 2014, a second criterion was included - the car also had to have an output limit of 130 hp.
The Land Transport Authority said on Friday that the recategorisation was to ensure that Cat A continued to cater mainly to mass-market car buyers and to prevent luxury models with smaller engines, such as the Mercedes-Benz C180, from negating that original intention.
LTA added that deflating Cat A COE prices was not the aim of the exercise. As a result of the recategorisation, the median Open Market Value (OMV) of cars registered in Cat A has gone down; the category also has a greater proportion of cars with lower OMV than before the recategorisation.
LTA said that the median OMV of Cat A cars has "remained consistently below S$20,000 in the one-year period since February 2014". "Comparing the six-month period before the recategorisation (August 2013 to January 2014) with the corresponding six-month period after (August 2014 to January 2015), the median OMV for cars registered with COEs obtained in the latter period has decreased by 27 per cent, from S$26,147 to S$19,143."
LTA said the six-month period prior to the implementation of the recategorisation - instead of the full year prior - was used as a basis for comparison because several policy changes had affected the car market in the early half of 2013; vehicle-financing restrictions and the tiered Additional Registration Fee structure were implemented on Feb 25, 2013.
For a "cleaner" analysis, the more stable six-month period was therefore taken.
Correspondingly, the proportion of cars with OMV at or below S$15,000 has gone up from 8 per cent to 12 per cent of all Cat A registrations.
Cars with OMV at or below S$20,000 went from 26 per cent to 70 per cent in the category; those with OMV at or below S$25,000 rose from 43 per cent to 80 cent.
But a Mazda spokesman pointed out that Mazda, along with Toyota, Nissan and Honda, had benefited from the recent increases in COE supply and the return of replacement buyers to the market, but the fall in the Japanese yen was also a significant factor in the OMV downtrend among Cat A cars.
"The OMVs of our models have been lower in the past year, mainly due to the currency exchange rate," said the spokesman.
A year ago, 100 yen was pegged at about S$1.25; today, the exchange rate is around S$1.15 - a 7-8 per cent drop.
He added: "So if you ask me, I don't think the recategorisation is the only factor involved."