Car shows drive COE hikes; Category B back above S$100,000 

CERTIFICATE of Entitlement (COE) premiums for passenger cars all rose in April’s first round of bidding, with the category for larger, more powerful cars rising above S$100,000 after a steady decline over the past two months.

The price for Category A, used to register mainstream cars, rose 4.1 per cent or S$3,511 to S$89,000.

The Category A COE applies to cars with engine capacities of up to 1,600 cubic centimetres (cc), or with up to 97 kilowatts (kW) of power, or for electric vehicles (EVs) with up to 110 kW of power.

The premium for larger, more powerful cars – Category B – rose the most. It increased 5.5 per cent or S$5,323 to S$101,334.

Category B is for cars with engines of more than 1,600 cc in capacity, or more than 97 kW, or for EVs with more than 110 kW.

Premiums in this category had been on a steady decline from a peak of S$112,000 in January’s second round of bidding; they had hovered below S$100,000 for the previous three rounds of bidding.

Category E, the open category, went up by 5.4 per cent or S$5,146 to S$101,002.

While a COE from this category can be used to register any type of motor vehicle (except for motorcycles), it is typically used to register passenger cars that would fall under Category B.

Category C, applicable to commercial vehicles and buses, was the only category to fall in price, dropping 3.7 per cent or S$2,611 to S$67,501.

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Prices for Category D, for motorcycles, rose 3.2 per cent or S$311, to S$10,000.

The shows must go on

Industry observers said that the rise in passenger car premiums could be a result of two major car shows, the Singapore Motorshow (Jan 11 to 14) and The Car Expo (Apr 13 to 14).

Car dealers could still be clearing remaining orders from the former, and bidding more aggressively to head off an expected rise in premiums arising from the latter.

Two car dealers The Business Times spoke to said that April’s first round of bidding represents the last chance for dealers to complete orders taken at the Singapore Motorshow.

Cars are typically sold in a package together with a COE, with the dealer specifying a number of bids – usually six – to obtain the COE at a certain price. If COE prices remain higher than the agreed price, the customer is required to top up the difference.

For a premium, customers can opt for a “guaranteed” COE package, under which the dealer absorbs any COE premium increases, but the certificate must still be secured within six bidding rounds.

The general manager for a luxury European car dealership said: “With orders taken at the Motorshow, (April’s first round) was the last chance for dealers with guaranteed packages to obtain a COE for customers.”

The managing director of a multi-brand car dealership told BT: “Since this is the last bid for them, they may have put in a little bit more in order to secure a COE. In February and March, things were quite stable, so that was a palatable price level until the time ran out.”

Ng Lee Kwang, a board adviser for the Goldbell Group, said: “The general feeling is that we expected Category A to go up as a result of these unfulfilled orders.”

The managing director added that dealers had expected COE premiums to rise after The Car Expo, thanks to order books being filled on the back of sales promotions, which would give them more impetus to secure a COE during this round.

Retail back in force

Observers also suggested that it is likely retail rather than fleet buyers that have kept COE prices buoyant.

“I think private-hire car fleets have slowed down their buying. I’ve heard that some may be facing cash flow issues now,” said Goldbell’s Ng.

He added that with an economic environment that is not “super bullish”, rentals of private-hire cars could be difficult. “If you have a few hundred cars that are not rented out, the depreciation could be significant,” he added.

The Land Transport Authority (LTA) said the private-hire car population hit an all-time high of 82,503 in February 2024.

The LTA said in a Mar 25 Facebook post that “more than nine in 10” winning bids across Categories A and B were submitted for individuals, which implied that the majority of those bids came from private car buyers.

Car dealers bid in the name of the individual buyer, while fleets do so in the name of their respective companies.

For April at least, passenger car COE prices will continue to fluctuate as the market grapples with pent-up retail demand.

Ng Choon Wee, the commercial director for Hyundai distributor Komoco Motors, said: “I actually think Category B is getting a bit wild. The number of bids went up quite a bit, and that means there is buying interest.”

“In fact, I think buying interest has been back since January. So it will be an eventful next few weeks, and to start, there is a high chance COE prices will go up after the show next week.”