Passenger car COE premiums bounce back after previous round’s drop
Category A at S$90,889 and Category B at S$102,334, while open and goods vehicle categories both post decreases
CERTIFICATE of Entitlement (COE) prices for the two passenger car categories in June’s second round of bidding have bounced back after a significant drop in the previous round.
But unlike in June’s first round of bidding, when COE premiums for all categories fell, results were mixed this time around.
Premiums for motorcycles went up marginally, while the open and goods vehicle categories both dropped.
The price for Category A, for mainstream cars, rose 3 per cent or S$2,689 to S$90,889.
The Category A COE is for cars that have engines of up to 1,600 cubic centimetres (cc) in capacity or with up to 97 kilowatts (kW) of power, or for electric vehicles (EVs) with up to 110 kW of power.
The price for Category B – for larger, more powerful cars – rose 1.7 per cent or S$1,727 to S$102,334.
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Category B is the category for cars with engines of more than 1,600 cc in capacity or that have more than 97 kW, or for EVs with more than 110 kW.
The rises in both these categories follows their significant price drops in the previous round of bidding.
Category A posted its largest fall in price – 4.9 per cent – in June’s first round of bidding; Category B was close behind, decreasing by 4.8 per cent.
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Category E, the open category which can be used to register any type of motor vehicle except motorcycles, fell by 1.6 per cent or S$1,600 to S$100,000.
The price for Category C, which is for goods or commercial vehicles and buses, dipped 1 per cent or S$689 to S$69,900.
The price for Category D, used for motorcycles, rose 0.1 per cent or S$13 to S$9,002.
Expected, gentle kickback
Nicholas Wong, the chief executive officer for authorised Honda dealer Kah Motor, said that the rise in premiums for Category A and B was entirely normal and “expected”, especially after the significant drops in June’s first round of bidding.
In a relatively high COE price climate like the one prevailing in the industry now, a sizeable drop in prices is enough to bring some buyers back to the market, which sends the prices back up, said Wong.
But he added that the price increase was mild, as the ongoing school holidays quietened the car-buying market.
Car dealers The Business Times (BT) spoke to attributed last round’s drop in COE premiums to weak demand, with many buyers being abroad with their families for the school holidays, which run from May 25 to Jun 23.
Ng Choon Wee, the commercial director for Hyundai distributor Komoco Motors, who also expected premiums to rise after the drop in June’s first round, said the kickback may have been more had it been a regular, non-holiday month, with more buyers in the country.
Lower premiums on the horizon?
The managing director of a multi-brand dealership told BT that the lower price for Category E, relative to Category B, could mean that the industry is seeing lower premiums on the horizon.
Category E can be used to register any vehicle, aside from motorcycles, but it is typically used to register cars from Category B, which is almost always the most expensive category.
Unlike Category A and B, which can only be used to register on behalf of an owner or company, a Category E certificate is transferable and has a three-month validity. Dealers nab Category E certificates for flexibility in registering cars or amid speculation.
Beyond the school holiday factor, however, dealers also pointed out that the COE market has been stable for the past few months.
There was a period of instability and extremely high COE premiums from around mid-2023 to January 2024, when COEs charted swings of more than S$10,000.
This year’s major fluctuations in COE premiums happened mostly in January. The first round of bidding that month sent premiums to 12-month lows, which were followed by a kickback of S$27,000 for Category B.
But since then, COE prices have rarely fluctuated by more than S$5,000 between rounds.
Kah’s Wong said this is because the industry “faces no pressing issues”, and that COE quotas are expected to grow over the next few years, with a rise in the number of vehicle deregistrations.
He also said that the Land Transport Authority’s move to average out deregistrations over a longer period has contributed to this stability.
Because the population of passenger cars is not allowed to grow, COE quotas are determined largely by deregistrations.
Since February 2023, the rolling average of the number of vehicles deregistered over the previous four quarters has been used to determine the COE quota, up from two quarters in July 2022.
But the downside to this, added Wong, is that deregistrations will also take a longer time to be reflected in the actual COE quota. Accordingly, prices may take longer to come down.
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