COE premiums mostly up; Cat A stays flat

Singapore

THE big car certificate of entitlement (COE) premium rebounded even as the small car premium remained exactly the same.

Category A - for cars below 1,600cc and 130hp - was unchanged at S$42,801 from the previous bidding exercise two weeks ago.

But Cat B - for cars above 1,600cc or 130hp - climbed S$2,301 to S$49,802.

Cat E - the open category which currently tracks Cat B - was also higher, up S$1,898 to S$49,899.

Meanwhile, Cat C - for goods vehicles - jumped S$3,333 to S$40,212, while Cat D - for motorcycles - was unchanged at S$6,001.

Alpine Group sales director David Pang had expected prices to be "stable or slightly weaker'' and was surprised by the Cat B result.

"Perhaps some dealers are clearing their non-Euro 6 stock,'' he said.

The stricter Euro 6 emission standard will be applied from Sept 1, 2017, and those with existing Euro 4-compliant cars are under pressure to sell them before the deadline.

Mr Pang added that in general, the market is weak.

"There is a constant flow of showroom traffic but there is no weekend spurt. People seem to be holding back,'' he said.

But for Neo Nam Heng, chairman of the Prime Group of companies, the spike in the Cat B premium was "a normal adjustment'' after it had dropped by over S$5,000 in the last two bidding exercises.

"That attracted some customers into the showroom,'' he said.

Mr Neo said another reason is the favourable exchange rates for the yen and pound, thus giving dealers bigger margins to bid for COEs. The yen is required for most Japanese cars, while some parallel imports are sourced from the UK.

He said: "It is not a drastic change, so there's nothing to shout about. I am glad to see there is no rush despite car COE premiums weakening in the last few rounds. The current mood should continue.''

As for the higher goods vehicle premium, Mr Neo said some consumers believe the message that the market is awash with Cat C COEs.

"If everybody rushes in, premiums will never go down,'' he explained.

He added that some dealers had also offered guaranteed COE packages.

"So they have to fulfil their commitment; some of them may have suffered losses.''

On the other hand, Mr Pang believes that Cat C could have spiked because of a possible contraction in COEs from August onwards.

Based on the projection of vehicle deregistrations, he said it appears that the upcoming quota will be "much smaller, maybe by half''.

"There will be fewer Cat C COEs unless there is a surge in June's scrappage numbers.''