Big car premium hikes 8.4% as COEs spike up

[SINGAPORE] COE premiums spiked up across the board yesterday, with the big car category unexpectedly closing in on the $100,000 mark.

In the first bidding exercise of October for certificates of entitlement, Category A - for cars below 1,600cc - rose $1,249 to $85,000, while Cat B - for cars above 1,600cc - surged $7,261 or 8.4 per cent to $93,500.

The last time an equivalent COE category cost more than $100,000 was 19 years ago.

Cat E - the open category - climbed $6,888 to $93,889 as it tracks Cat B.

Meanwhile, Cat C - for goods vehicles - was $309 higher at $76,310, and Cat D - for motorcycles - inched up $258 to $1,961.

Some dealers seemed to think the increase in the Cat A COE premium is due to a backlog of orders as well as both panic buying and selling.

"The number of bids in Cat A was close to double the 365 COEs available," said the sales manager of a volume brand in explaining the backlog.

He added that the looming re-categorisation of Cat A has also sparked panic among both buyers and sellers. From February 2014, the engines of Cat A cars not only have to be limited in displacement to under 1,600 cc but their power also cannot exceed 97 kW or 130 hp.

Because of this, some sellers are keen to offload existing stock before the deadline.

"So even if COE goes up, it is better for them to clear their stocks now before it becomes even more expensive later," he said.

As for the spike in the Cat B COE premium, the sales manager was nonplussed. "I didn't expect it to jump so much, so I was outbid," he confessed, explaining that the Leng Kee Road motor belt was "quiet" over the past three weekends.

He said: "The second weekend was especially quiet although it was slightly better during the most recent weekend. I don't know who could be bidding for COEs so aggressively."

Yesterday's rise in the Cat B premium was likely the result of the relatively small gap between it and the Cat A premium after the previous tender, said the director of a luxury brand.

"It was small, less than $2,500, so interest shifted to Cat B," he said. "It's the usual ding dong story. It should swing back now that the gap has widened."

He said it is unlikely that the sharp rise in Cat B was caused by the new Mercedes-Benz S-Class because launch prices are not firmed up yet.

Rather, he believes the most plausible reason is that one of the luxury makes is the sponsor of next February's Singapore Airshow, an event for which it has to register more than 500 cars.