WHEN Certificate Of Entitlement (COE) prices go high, some car makers go low. Audi is the latest brand to add smaller-engined versions of its models, in order to sneak them into a cheaper corner of the COE market and fight rising prices.

The German luxury car maker unveiled 1.0-litre variants of its compact A3 Sedan and A3 Sportback models this week, just as COE premiums continued their climb to painful multi-year highs.

On Wednesday (Jun 22), the Category A COE (for combustion machines with less than 130hp or 1.6 litres under the bonnet, and electric cars no more powerful than 110kW) climbed S$1,188 to S$74,989. The Category B certificate (for combustion cars with engines that make more than 130 horsepower or are above 1.6-litres in capacity, and electric cars with outputs of more than 110 kilowatts) climbed sharply, rising S$5,317 to S$106,001.

The new 1.0-litre versions of the A3 Sedan and A3 Sportback are eligible for the Category A COE, unlike the 1.5-litre models, which need a Category B certificate. That helps Audi sells its cars for less money; Audi lists the A3 Sedan 1.0 TFSI for S$188,148 (S$21,267 cheaper than the 1.5-litre) and the A3 Sportback 1.0 TFSI for S$186,369 (which makes it S$21,266 cheaper than the 1.5 litre).

Some of the COE savings are negated by a S$15,000 emissions rebate that the cleaner-burning 1.5-litre models qualify for, but the 1.0-litre models do not.

As recently as March last year, the two COEs cost similar amounts of money, but the widening price gap between them since then has opened up a market for less-powerful cars from luxury brands. In May, BMW added a Category A version of its 2 Series Gran Coupe (a compact sedan), and will likely do the same for the 2 Series Active Tourer (a compact multi-purpose vehicle) when a suitable engine becomes available.

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With less horsepower, these Category A models offer slower acceleration than the Category B models, but their makers will be hoping that they sell fast.