Mainstream car COE drops S$10,000 in largest price fall of 2024; Cat A now under S$90,000 for first time since June
Premium for larger, more powerful cars slips 2.7% to S$105,081
THE Certificate of Entitlement (COE) price for the mainstream car category, Category A, has taken a notable plunge, falling by 10 per cent or S$10,000 to S$89,889, as most COE premiums also declined in November’s second round of bidding.
This is the category’s largest decrease for 2024 to date, compared to a dip of S$4,500 to S$88,200 between May’s second round and June’s first round of bidding.
That first round in June was also the last time Category A sank below the S$90,000 mark.
The Category A COE applies to mainstream cars with engines of up to 1,600 cubic centimetres (cc) in capacity or with up to 97 kilowatts (kW) of power, or for electric vehicles (EVs) with up to 110 kW of power.
The COE premium for larger, more powerful cars dropped by 2.7 per cent or S$2,920 to S$105,081.
Category B is used to register larger or more powerful cars with engines of more than 1,600 cc in capacity or that have more than 97 kW of power, or for EVs with more than 110 kW.
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Prices for Category D, used for motorcycles, decreased 4.6 per cent, or S$420, to S$8,669.
Category E, the open category which can be used to register any type of motor vehicle except for motorcycles, decreased by 1.4 per cent or S$1,499 to S$107,501.
Category C, used to register commercial vehicles and buses, was the only category to go up in price this round: It inched up 1 per cent or S$660 to S$69,000.
20,000 reasons not to buy?
Car dealers The Business Times spoke to said that retail demand for cars had slowed considerably in November, and attributed the slump to the government’s announcement of an additional 20,000 COEs.
On Oct 29, the Land Transport Authority (LTA) announced a one-off injection of 20,000 COEs that would begin in February 2025. These COEs will be progressively added across all vehicle categories over the next few years.
Since the announcement, car dealerships have seen notably less buying interest; some have begun offering lower prices to entice customers.
Ng Choon Wee, the commercial director for Hyundai distributor Komoco Motors, said that a number of mainstream brands – Hyundai included – have slashed prices to gain buyer interest.
“Everyone has been slashing prices to get orders, as the market has been very quiet since the announcement. So dealers have less margin to bid higher for COEs too,” he said.
Nicholas Wong, the chief executive officer for authorised Honda dealer Kah Motor, said: “People are side-lining their car purchases because they have been expecting COE prices to come down after the announcement.”
He described the drop in Category A as “a good thing”, since the measure to cool the market had worked, with COE prices having hit the year’s highs in October.
Automotive consultant Say Kwee Neng disagreed that the 20,000 COE injection affected consumers’ buying behaviour on a large scale.
“The announcement is too nebulous to be factored into decision-making by consumers. There are very few specifics: We don’t know how many COEs will be given to each category, and over what time frames. There’s not enough information for consumers to rely upon for proper decision-making if they are in the market to buy a car,” he said.
Say added that the school holidays, which began on Nov 15, have always been a major factor in dampening the demand for cars – and that the effect may be stronger now, with consumers spending more on travel than on material goods.
Big spenders’ influence
Meanwhile, Category B remained relatively unaffected as the buyers in this category – for larger or luxury cars – are less price-sensitive.
Another factor is that competition between the two dominant luxury brands here, BMW and Mercedes-Benz, typically intensifies in this quarter as they compete for market share and dealer incentives on sales targets.
The relatively small drop in Category B’s premiums could also be explained by the large number of EV brands buoying buyer interest, said Ng, given that most EV brands (other than BYD and Tesla) lack Category A offerings.
Big spenders of another sort could also have kept premiums up.
Both Komoco’s Ng and Kah Motor’s Wong said that private-hire fleets were active in bidding in the last two rounds, and that the drop in Category A’s price might have been even larger without their actions.
Wong said that when retail sales are depressed, fleets step up to fill up the gap in demand.
“Based on bidding behaviour, I think private-hire fleets took the chance to swoop in to scoop up COEs at a lower price,” said Ng. “The (Category A) dip might have been higher without them.”
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