Commercial vehicle, large car COEs head overall drop in premiums
Mainstream car category has the smallest drop at 2.9%
CERTIFICATE of Entitlement (COE) prices for all categories fell in November’s first round of bidding, with the commercial-vehicle and large-car categories recording the most significant dips.
The price for Category C, which is for commercial vehicles and buses, fell 6.3 per cent, or S$4,599, to S$68,340.
Category B led the way for the two categories for passenger cars, its price falling 5.2 per cent, or S$5,889, to S$108,001.
Category B is used to register larger or more powerful cars with engines of more than 1,600 cubic centimetres (cc) in capacity, or which have more than 97 kilowatts (kW) of power, and for EVs with more than 110 kW.
The price for Category A – which applies to mainstream cars – dropped 2.9 per cent, or S$3,011, to S$99,889.
The Category A COE is for cars with engines up to 1,600 cc in capacity or 97 kW of power, and for EVs with up to 110 kW of power.
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Prices for Category D, used for motorcycles, decreased 5.2 per cent, or S$500, to S$9,089.
Category E, the open category which can be used to register any type of motor vehicle except for motorcycles, decreased by 5 per cent, or S$5,700, to S$109,000.
The results for November’s first round of bidding marked the second time in a row all COE premiums dipped, after having fallen in the preceding round (October’s second round) from new highs for the year set in October’s first round of bidding.
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Cooling measures
Motor dealers told The Business Times that the drop in premiums could be attributed to government efforts to cool the car market, especially after the recent highs.
On Oct 29, the Land Transport Authority said 20,000 additional COEs would be put into the market from February 2025; they will be spread over the next few years and across all categories.
Corinne Chua, managing director of Volvo at Wearnes Automotive, said that showroom traffic and demand have fallen since that announcement.
The sales manager for a dealership selling passenger cars and commercial vehicles agreed, saying that the announcement had an immediate effect and dampened showroom traffic and sales.
“When the news (on additional COEs) broke, the reaction from customers was ‘Wow, that’s a lot, now COE prices will go down’. And it really held people back, because they stopped coming to the showroom in the past two weeks,” he added.
This thinking could have affected all vehicle buyers, not just of passenger cars but also commercial vehicles as well, he said. He also noted that there were more registrations under the Early Turnover Scheme (ETS) than under Category C, which could have contributed to that category seeing the largest dip this round.
Under the ETS, commercial vehicle owners can replace an existing vehicle with a cleaner model without having to bid for a COE.
Lukewarm or hot?
But dealers warned that despite the headline figure, the injection of 20,000 additional COEs would not make a big impact in lowering COE prices in the long-term, because demand remains strong.
Sabrina Sng, managing director for Lotus, Polestar and Insurance at dealership group Wearnes Automotive, said: “In the immediate term, I think the announcement moderated the overbidding pressure from the Car Expo to fulfil orders. I think the government was signalling that if prices go too high, it would step in to moderate COE prices.”
The overall effect of the 20,000 is not much, she argued, given that it would be spread out over a few years and across all the COE categories. In the meantime, the demand for vehicles remains strong because of the high number of cars nearing 10 years old.
“It is not as if demand has suddenly plunged dramatically or for an extended period; I think (this price drop) is a market correction from October. But no matter what, dealers still need to secure COEs for orders, so it won’t have a big effect in the long term,” she said.
She pointed out that the most immediate sign of this is the premium for Category E, which remained higher than that of Category B.
A Category E certificate is transferable and has a three-month validity, unlike Category A and B certificates, which must be used to register on behalf of an owner or company. Dealers stock up on Category E certificates in anticipation of future demand.
Given the strong, consistent demand reflected in 2024’s high premiums, they might even swing upwards again in the next round.
The sales manager said: “I feel that with this price drop, people may ‘chiong’ in and drive the price back up, which is very common. I think (premiums) will be stable at current price levels for some time.” (“Chiong” means to rush.)
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