Small-car COE premium up S$910 on strong replacement buying

Singapore

THE small car certificate of entitlement (COE) premium climbed on Wednesday as replacement buyers thronged the market, even as the big-car premium slipped.

In the first COE bidding exercise for the new and larger November- 2014-to-January-2015 quota, Category A - for cars below 1,600cc or 130 hp - rose S$910 to S$64,900.

Cat B, for cars above 1,600cc and 130 hp, fell S$1,112 to S$70,890.

Cat E, the open category which currently tracks Cat B, shed S$901 to S$71,300.

Cat D, for motorcycles, was also lower, down S$122 to S$4,290.

But Cat C, for goods vehicles, continued to rise, jumping S$2,701 to S$63,701.

The commercial vehicle premium has shot up by close to S$14,000 in just three tenders on a sharp reduction in supply and is now almost on par with the small-car premium.

For the current quota, Cat C numbers were cut by a substantial 45.2 per cent from 515 COEs per month to just 282 because of the success of the Early Turnover Scheme (ETS).

Under ETS, the owner of an existing goods vehicle does not have to bid for a COE but instead pays a pro-rated COE based on the prevailing quota premium. But for each new vehicle registered under ETS, there will be one less COE available in the next quota.

While the current quota is bad news for those who want to buy a new goods vehicle or bus, it is good news for someone eyeing a passenger car. Compared with the just-ended August-to-October-2014 quota, there are 22.1 per cent more COEs for Category A, 12.7 per cent more for Cat B and 10.3 per cent extra Cat E COEs.

Despite the relatively large increase in Cat A COEs, the premium rose mainly due to demand from those replacing their ageing vehicles, which are mostly eight to nine years old.

The sales manager of a popular Japanese dealership said: "The Cat A replacement market is strong at the moment."

"Just look at the number of bids," he added, referring to the 10 per cent rise on Wednesday from the number a fortnight ago.

On the other hand, the Cat B segment was quieter. But the managing director of a luxury dealership does not expect it to stay that way for long.

"Many have been waiting on the sidelines for the premium to drop. Now that it has, I expect them to come charging in by the next tender," he said.

Analyse historical COE data with The Business Times' interactive tool at http://btd.sg/coetrack