Goods vehicle COE price up as dealers fight to clear stocks

Singapore

PASSENGER car certificate of entitlement (COE) premiums slipped even as the goods vehicle premium continued its steady ascent.

In the first bidding exercise for October, Category A - for cars below 1,600 cc and 130 hp - shed S$1,141 to S$41,761, while Cat B - for cars above 1,600 cc or 130 hp - was S$1,080 lower at S$48,109.

Cat E - the open category which usually tracks Cat B - inched S$12 down to S$49,000.

Meanwhile, Cat C - for goods vehicles - jumped S$2,012 to S$48,902 but Cat D - for motorcycles - dipped S$491 to S$5,010.

Nicholas Wong, general manager of authorised Honda distributor Kah Motor, called the downward adjustment of the Cat A premium "okay, considering the backlog''. Two tenders or exactly four weeks ago, the Cat A premium had slumped by nearly S$7,000 to a seven-year low. This triggered a rush to showrooms across the island, with most volume dealerships reporting an at least two-fold increase in bookings.

The order backlog is expected to take "a couple more'' tenders to clear, said Mr Wong, adding: "The market has been quiet since the COE premium went up.''

Neo Nam Heng, chairman of the Prime group of companies, said that after the Cat A COE premium rebounded two weeks ago, "the market is totally quiet''.

"It's a ghost town,'' said Mr Neo. "Today's result is in line with our expectations.''

As for the Cat B and Open category premiums, he said: "They are not big adjustments, they have stabilised.''

What caught his attention, however, was the increase in the Cat C COE premium.

During Wednesday's bidding, Cat C, together with Cat A, were the first categories out of the starting blocks. For the goods vehicle premium, this was the third consecutive increase.

Mr Neo said: "Cat C is now at the same level as Cat E, so the market will use the Open category COE to register commercial vehicles. I had foreseen this due to high demand but I did not expect it to happen so soon.''

He explained that some dealers are aggressively clearing their stocks of Euro 5-compliant goods vehicles before the new Euro 6 diesel emission standard comes into effect on Jan 1, 2018.

According to the director of a commercial vehicle distributor, some dealers are desperate to move their Euro 5 units because the total number in the market exceeds the COEs available until year-end.

The director said: "Everyone is fighting to secure a COE. The situation is serious because unsold stocks have to be re-exported. The cost is high, at S$20,000 to S$30,000 per vehicle on average - more if it's a HGV (heavy goods vehicle).''