Car COE premiums flat ahead of bigger quota

Singapore

PREMIUMS for passenger car COEs (certificates of entitlement) hardly budged in Thursday's final bidding exercise, ahead of next month's new and bigger quota. Category A - for cars below 1,600cc and 130 hp - inched up S$110 to S$63,990, while Cat B - for cars above 1,600cc or 130 hp - slipped S$178 to S$72,002.

Cat E - the open category which currently tracks Cat B - climbed S$198 to S$72,201. But Cat C - for goods vehicles - jumped S$3,611 to S$61,000, as Cat D - for motorcycles - eased S$388 to S$4,412.

The sales manager of a Japanese dealership said that there was little change in car COE premiums because distributors may be moderating their bids in anticipation of the supply increase.

The government announced last week that the November 2014 to January 2015 COE quota would be 5.3 per cent larger. In particular, Cat A enjoys a 22.1 per cent increase over the current August to October 2014 quota or an extra 253 COEs each month.

Cat B expands by 12.7 per cent or 128 more COEs, while Cat E has 10.3 per cent extra per month.

The sales manager added that the reaction to the quota announcement was mixed, with some showrooms in the Leng Kee Road motor belt slightly busier but not others.

"Prospective buyers probably want to see premiums fall first before they come in to buy," he said.

But the upcoming quota will certainly be bad news for commercial vehicle buyers. Cat C is going to be cut by a massive 45.2 per cent from 515 to 282 COEs a month due to 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. Instead, a pro-rated COE is paid, based on the prevailing quota premium. This means each new vehicle registered under ETS reduces the number of COEs available in the next quota.

The sales manager said that with higher Cat C premiums, new buyers or those with vehicles not old enough to benefit from ETS will be hit hardest. "The commercial vehicle COE now costs almost as much as a passenger car COE. Some people can't accept that," he added.

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