Passenger car COE premiums fall on bigger quota

Singapore

CERTIFICATE of entitlement (COE) premiums for passenger cars have fallen in the first bidding exercise of February due to a bigger quota, say some motor distributors.

Category A - for cars below 1,600 cc or 130 hp - shed S$2,488 to S$48,401, while Cat B - for cars above 1,600 cc and 130 hp - slumped S$4,598 to S$48,209. This means that the big car COE costs less than the small car COE.

Cat E - the open category which currently tracks Cat B - was S$4,044 lower at S$48,556.

But the remaining two COE categories were higher. Cat C - for goods vehicles - climbed S$1,900 to S$48,901, and Cat D - for motorcycles - increased S$360 to S$6,412.

For the next three months, the number of Cat A COEs increases by 11.3 per cent to 4,104 monthly, while Cat B rises 9.2 per cent to 2,714 each month and Cat E jumps 20.5 per cent to 963 per month.

The quota expansion had fuelled the expectations of many prospective buyers that COE premiums are set to fall, said Nicholas Wong, general manager of authorised Honda distributor Kah Motor.

"As a result, the market demand has been very weak," he said, adding that showrooms have been quiet, partly because they were closed over the Chinese New Year long weekend.

Nevertheless, he expects his showrooms to be crowded this weekend with people attracted by the lower premiums.

But Mr Wong also pointed out that despite the Cat A premium softening, the number of bids on Wednesday were 10.4 per cent higher than in the previous bidding exercise three weeks ago.

"This could be due to speculation as some people were thinking that the premium would crash," he explained.

Speculation could have also played a part in the rise of the Cat C premium.

The goods vehicle category was the first to register any bidding action on Wednesday. One-and-a-half hours before the tender close, it had raced to above S$45,000.

It would be nearly an hour before another category - Cat B - saw bids rise above S$1.

For the current February-to-April 2017 quota, Cat C contracts 10.8 per cent to 322 COEs per month.

This means that there are about 20 Cat C COEs fewer per tender, so "people are scrambling", said one commercial vehicle dealer.

He added: "They are eager to secure a COE now in anticipation of higher prices in future."

This is even though demand in this segment has not being particularly strong, given the current economic conditions.

The dealer said: "In spite of the circumstances, the small number of COEs means there just isn't enough to go around."