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Small car COE premium rises

Customers in the Nissan showroom this year. Observers say the market is quiet now, but the Cat A spike could have come from recent road shows.

THE certificate of entitlement (COE) premium for small cars rose in October's first round of bidding, surprising some car dealers who had expected premiums in general to stabilise amid a slowing economy, which continues to tighten its grip on vehicle purchases.

Category A, for cars below 1,600cc and 130 hp, was up S$1,507 to S$51,507, even as Cat B, for cars above 1,600cc or 130 hp, slumped S$2,500 to S$53,001.

Cat E, the open category which currently tracks Cat B, slipped S$1,001 to S$54,200.

Meanwhile, Cat C, which is for goods vehicles, and Cat D, for motorcycles, were also lower. Cat C fell by S$1,188 to S$48,702, and Cat D, by S$148 to S$6,353.

Nicholas Wong, the general manager of authorised Honda distributor Kah Motor, said: "The overall market is very quiet because of the economy, and because sticker prices have not come down much.''

Some prospective customers are holding off buying a new car for now as a result of this.

Nevertheless, interest in the Cat A category was higher than in the previous round; there was a 12.6 per cent increase in the number of bids received.

On the other hand, the number of Cat B bids was 11.5 per cent lower.

One dealer who declined to be named said the Cat A spike could be due to some interest in smaller models in the past week, following roadshows by car companies, including multi-franchise dealership Wearnes.

But he added that it could also be due to private-hire companies beefing up their rental fleets.

He said: "In the last five minutes of the tender, the Cat A premium jumped by S$1,000, with the number of bids increasing by 300. Which distributor would have that many orders?''

Earlier this year, the Land Transport Authority moved to block bidding information so that that the bidding behaviour of a company is no longer available.

Looking ahead, Kah Motor's Mr Wong said the upcoming quota for the November 2016-to-January 2017 period is unlikely to influence premiums much.

This is because the car deregistrations in July and August have not moved substantially, compared to the preceding months.

"It all depends on September's deregistrations. If it is high, we will see an increase in the next quota. But if it continues to be low, the quota will contract and premiums will remain high. But whether the quota contracts or expands, I expect any change to be very minor.''