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Year-end spike in big car COE premium

Thursday, December 4, 2014 - 05:50
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Few distributors saw the S$3,004 spike in the Cat E premium coming. One suggested speculation may have been at play.

Singapore

THE big car premium spiked but the small car premium softened in Wednesday's bidding exercise for certificates of entitlement (COES) - the penultimate tender for the year.

Category A, for cars below 1,600cc or 130 hp, slipped S$800 to S$67,089, but Cat B, for cars above 1,600cc and 130 hp, jumped S$1,499 to S$74,389.

Cat E, the open category which currently tracks Cat B, rose S$3,004 to S$76,904, while Cat D for motorcycles was S$21 higher at S$4,210.

Cat C, for goods vehicles, was S$5,000 lower at S$60,001. This category appeared to be taking a breather after shooting up in four straight sessions; it had been below S$50,000 in September.

The increases had been a response to the severe reduction in COE supply because of the success of the Early Turnover Scheme (ETS). Under ETS, buyers pay a pro-rated COE premium instead of bidding for a COE.

But it was the passenger car market that caused a stir among some distributors. Few had foreseen Cat E's S$3,004 jump, although many had expected the big car premium to appreciate because of the year-end rush to meet sales numbers and performance targets.

The managing director of a luxury dealership said: "This is the second-last bidding exercise of the year, so some distributors are hoping to do as much window-dressing as possible."

He added: "But I was surprised that Cat E went up by so much. There could be a speculative element."

With Cat E COEs being transferable, he suggested that some dealers may be stocking up on them; in the event of last-minute car purchases, the Cat E COE can be used for immediate registration.

"That is why the bidding for Cat E may have been more aggressive," he said.

As for Cat A, he believed the tolerance level of this category has been reached.

Referring to Cat A buyers as those who are more price-conscious and looking for bread-and-butter models, he said: "They are not willing to pay as much for a COE as a Cat B buyer. Anyway, they expect more COEs in the pipeline next year, so why not wait a while more?"

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