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COE bidding to resume in uncertain market
CERTIFICATE of Entitlement (COE) bidding exercises will resume from July 6, the Land Transport Authority (LTA) said in a press release on Thursday, with subsequent bidding exercises on the first and third Mondays of each month.
The announcement came a day before motor vehicle dealerships and showrooms can resume operations, including test drives by prospective buyers. Friday is the first day of Phase Two of Singapore's reopening following the end of the "circuit breaker".
The COE quota for the bidding exercises in July will be 8,737. The accumulated quota from the suspended bidding exercises - a total of 19,940 from April to June - will be gradually returned to the market over the next 12 months starting in July, said LTA. "In reviewing how to return the accumulated COE quota to the market, LTA has considered the need to ensure sufficient supply of COEs to meet the orders that have built up during the period of COE bidding suspension, as well as the need to smoothen the supply of COEs to ensure long-term market stability."
A third of the accumulated quota, or 6,494 COEs, will be returned from July to September this year. The remaining 12,996 certificates will be returned from October this year to June 2021.
In a Facebook post on Thursday, Transport Minister Khaw Boon Wan said the question to look at is "how to redistribute the COEs accumulated from April to June fairly and not cause market contortion".
"One way is to do so immediately for the first COE cycle in full. But this will likely cause a market crash. We will re-inject the COEs gently so there is a soft landing," he said.
The bidding for COEs has been suspended since April 7 - the day that Singapore entered the circuit breaker period to stem the spread of the Covid-19 virus. The last bidding exercise took place on March 18.
With the first bidding exercise taking place on July 6, this gives both motor dealers and prospective buyers a two-week period for them to plan and confirm vehicle purchases.
Stanley Toh, the chief customer officer of Cycle & Carriage Singapore, said there are two schools of thought when it comes to predicting if buyers would be cautious or not ahead of the first bidding exercise in nearly four months.
"There are customers who have been patiently waiting (for the reopening), so there is that interest to purchase. On the other hand, people are aware that the economy is not doing so well, so they would be more inclined to be prudent at this time," he said.
"For customers who are looking to purchase more luxurious cars like the Mercedes-Benz, they may be less concerned. For the mass market cars, customers in that group tend to be more price-sensitive so their decision to buy will be swayed by COE prices and other factors."
LTA said the next COE quota announcement for the bidding period from August to October 2020 will be made in July.
With additional reporting by Deepanraj Ganesan