Passenger car COE premiums continue to break records as Open category nears S$160,000
PREMIUMS for certificates of entitlement (COEs) in passenger car categories all rose in October’s second round of bidding, with new highs set and the Open category nearing the S$160,000 mark.
Category E, the Open category that can be used to register any type of motor vehicle except motorcycles, booked an increase of 4 per cent or S$6,004 to S$158,004.
While it can be used to register vehicles other than passenger cars, Category E almost always behaves as an extension of Category B, which is the highest-priced non-Open category.
The latest price increase means Category E has set a new all-time high for a COE premium. It previously set a record of S$152,000 in October’s first round of bidding, which was the first time any COE price exceeded S$150,000.
The price for Category B, for larger or more powerful cars, rose 2.7 per cent or S$3,999 to S$150,001 in the latest round of bidding, eclipsing its previous record of S$146,002 set in the last round.
Category B COEs are applicable to cars with engines with a capacity of more than 1,600 cc and with more than 97 kilowatts (kW), or for electric vehicles (EVs) with more than 110 kW.
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Prices for Category A rose 1.9 per cent or S$2,000 to S$106,000, again breaking the previous record of S$104,000, also set in October’s first round of bidding. The category applies to mainstream cars with engines up to 1,600cc in capacity and with less than 97 kW, or for EVs with less than 110 kW.
Category C, applicable to commercial vehicles and buses, was the only category that logged a price drop in this round, dipping 1.3 per cent or S$1,110 to S$84,790.
Prices for Category D, used for motorcycles, increased 3.2 per cent, or S$345, to S$11,201.
Industry observers queried by The Business Times said they do not expect COE premiums to fall for the rest of 2023, as private-hire vehicle (PHV) companies continue to build their fleets and car prices rise in 2024 independent of COE cost.
The latter is because next year, stricter regulations for vehicle emissions testing and reductions in existing rebates for the Vehicular Emissions Scheme and EV Early Adoption Incentive mean that car prices will increase.
“In a normal year, the fourth quarter is usually quieter as car buyers go on holiday,” said Ng Choon Wee, commercial director for Hyundai distributor Komoco Motors.
“But in the past weeks, we have seen the effects of continued car buying on COE prices, in anticipation of the regulations being updated in 2024. Even if the retail side does become quieter, PHV fleets are still buying cars too,” he said.
From August to September, the PHV population increased by 654 to 78,760, which marks a new peak. “Right now, both consumers and dealers have a cost incentive to secure a COE and register a car earlier rather than later, so it’s no surprise that prices remain this high,” said Sabrina Sng, managing director for Lotus, Polestar and insurance at dealership group Wearnes Automotive.
COE premiums for passenger cars have consistently reached new records in recent bidding rounds.
The Land Transport Authority (LTA) has announced that there will be 12.9 per cent more COEs available in the next quota period from November 2023 to January 2024.
In this period, the number of Category A COEs available will increase by 882 or 21.6 per cent to 4,967. The number of Category B COEs will rise by 121 or 4.3 per cent to 2,937, while the number of Category E COEs will climb by 64 or 8.2 per cent to 841.
Both Ng and Sng concurred that the increase in quota which comes into effect in November may not have a moderating effect on prices.
They pointed out that the LTA had already injected a one-time boost to COE quotas in October, but prices still continued to climb throughout the month.
“With the one-time increase for October, it means that come November, Category A will only have around 47 more units than October and Category B will have around 19 more units of COE, for each bidding round,” said Ng. “That’s not a huge amount, which is why I think COE prices could easily reach S$160,000 or more this year,” he added.
In addition, both observers pointed out that there will also be a three-week break between now and November’s first round of bidding on Nov 6, as opposed to the normal two weeks between bidding rounds. This raises the likelihood of COE price increases as demand would have accumulated over a longer period.
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