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Small and big car COE premiums fall

Some dealers are taken aback by the quantum of the drop - Cat A premiums are down S$5,000, and Cat B, by S$3,491
Thursday, June 18, 2015 - 05:50
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Premiums for small and big car certificates of entitlement (COEs) slumped the most in Wednesday's bidding exercise, amid falls across all five categories.

Singapore

PREMIUMS for small and big car certificates of entitlement (COEs) slumped the most in Wednesday's bidding exercise, amid falls across all five categories.

With prospective buyers adopting a wait-and-see attitude because they expect the COE supply to continue going up from August, Category A - for cars below 1,600cc or 130 hp - tumbled S$5,000 to S$61,000.

Cat B, for cars above 1,600cc and 130 hp, fell S$3,491 to S$71,509, while Cat E, the open category which currently tracks Cat B, slipped S$1,300 to S$74,501.

Meanwhile, Cat C, for goods vehicles, slid S$398 to S$50,502; Cat D, for motorcycles, was S$108 lower at S$6,401.

Although dealers were expecting premiums to slide because most showrooms have been quiet in the past couple of weeks, some were still surprised by the size of the Cat A and Cat B adjustments.

The sales manager of a mid-sized Japanese dealership said: "I thought the Cat A premium would drop by about S$2,000 to S$3,000, but S$5,000? This should really get everybody's attention and bring them back into the showroom."

He added that if the crowds do return, he expected the fresh round of orders to keep bidding pressure up for the next two or three months at least.

"But I do not think the demand will push the Cat A premium back up by over S$5,000," he said. "Assuming the big boys do not slash prices or launch a big promotion, I do not see premiums surging up as strongly as they did in the first half of this year."

The sales manager reasoned that the current market of Cat A buyers is made up of mostly replacement buyers, who are eyeing bread-and-butter models.

"This group is more budget-conscious and will not overpay for their new car," he said.

But one sales director predicted that the COE premiums will continue to be soft for at least another month.

"Those who wanted to buy have already bought, and those who are still waiting will probably hold back and wait for the new COE quota in August before committing," he said.

The current May-to-July 2015 COE quota will be followed by the August-to-October 2015 quota, and although the deregistration numbers are not known yet, dealers expect the COE supply to go up by at least 10 to 20 per cent.

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