Mainstream car COEs at lowest level since January, while large car premiums spike 23%
CERTIFICATE of entitlement (COE) bidding in November’s second round saw prices for mainstream car COEs fall to lows not seen since January, while the prices of larger, more powerful cars spiked upwards by 23 per cent.
The price for Category A, for mainstream cars, dropped by 11.2 per cent or S$10,688 to S$85,001.
The Category A COE applies to mainstream cars with engines up to 1,600cc in capacity and up to 97 kilowatts (kW), or for electric vehicles (EVs) with up to 110 kW.
This is the lowest price for Category A in 2023 since January’s first round of bidding, when the price was S$80,000.
Prices for Category B – for larger, more powerful cars – increased by 23 per cent or S$25,335 to S$135,336.
Category B is the category for cars with engines of more than 1,600 cc in capacity or with more than 97 kW, or for EVs with more than 110 kW.
It was the largest increase of any category this round.
The category had already tumbled from an all-time high of S$150,001 in October’s second round to S$110,001 in November’s first round.
Category E, the open category, which can be used to register any type of motor vehicle except for motorcycles, increased by 8 per cent or S$9,991 to S$135,002.
It is used mainly to register cars that would fall under Category B, which is typically the most expensive COE category.
COE prices for commercial vehicles and motorcycles also fell.
Prices for Category C, applicable to commercial vehicles and buses, decreased 5.3 per cent or or S$4,112 to S$73,889.
Prices for Category D, used for motorcycles, decreased 8.2 per cent, or S$888, to S$10,001.
Passenger car COEs were breaking records up until November, when the LTA injected more COEs into the system with its “cut and fill” approach to increase quota supply.
The Cat A – Cat B contrast
Industry observers The Business Times (BT) spoke to said the tightened emissions regulations and reduced incentives for passenger cars, which are set to begin in 2024, are still shaping buying behaviour and COE prices.
In 2024, the Land Transport Authority (LTA) will adopt the Worldwide Harmonised Light Vehicles Test Procedure, which is stricter than current methods of testing. This means that fewer passenger cars will be eligible for rebates.
It will also revise the Vehicular Emissions Scheme (VES), which grades cars into bands depending on the amount of pollution emitted. The rebate for the A2 band, which a number of popular cars fall into, will be reduced by S$10,000.
This has brought about additional pressure to buy cars before the end of 2023, which together with demand from private-hire car fleets, had meant record high COE prices in previous months.
However, reduced stock levels of mainstream cars towards the end of 2023 has meant less demand for them, and, therefore, lower Category A prices. In contrast, luxury cars do not have this issue.
Ng Choon Wee, commercial director of Hyundai distributor Komoco Motors, said that his available stock levels are currently low.
“Because of this, we have been quoting customers the increased prices for 2024 since early this month. Because those prices can be S$10,000 to S$15,000 more, that discourages them from buying now.”
Ron Lim, head of sales and marketing for Nissan distributor Tan Chong Motor, said that the existing stock available for his cars – which are mostly VES A2 banded – to register by year-end is also low.
“We are already quoting based on 2024 registration since last round. But if and when stock is available and we can register the car this year, then we will knock off the VES incentive difference of S$10,000,” said Lim.
Return after the dip “logical” for Cat B
Multiple industry observers BT polled pointed out that the top-selling brands, such as Toyota, Mercedes-Benz and BMW, enjoy continued demand but had no such stock issues, as shown by last month’s registrations.
LTA registration figures showed that in October, Toyota registered 637 cars, Mercedes-Benz 339 cars, and BMW 275 cars. In comparison, Nissan registered 68 cars while Hyundai registered 70.
While Toyota is a mainstream brand, it also has models that use a Category B COE for registration. Lexus cars, which are all in Category B, are also counted under Toyota registration figures in LTA publications.
Eurokars Group executive director Charmain Kwee said: “There has been healthy demand for luxury cars in 2023, which is natural in a high-COE price environment. After last round’s huge dip in Category B, it’s logical that buyers of this category came back to showrooms.”
Eurokars Group is an authorised distributor for multiple brands and one of two authorised dealers for BMW in Singapore.
In addition, private-hire car fleets are still a factor in maintaining high COE price levels, even for Category B, noted Tan Chong’s Lim.
“For Category B, there were around 400-plus bids the market was not expecting. Chances are these are not from car dealers as we don’t have the S$25,000 margin to push the price that high – it must be commercial demand behind this push,” he said.
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