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COE premiums rise ahead of reduced quota from August

39060700 - 13_07_2016 - pixgenerics.jpg
Certificate of entitlement (COE) premiums bounced back up in the final bidding exercise before the start of a new, smaller quota from next month.


CERTIFICATE of entitlement (COE) premiums bounced back up in the final bidding exercise before the start of a new, smaller quota from next month.

Category A, for cars below 1,600cc or 130 hp, was S$699 higher at S$53,000. Cat B, for cars above 1,600cc and 130 hp, climbed S$1,419 to S$57,508.

Cat E, the open category which now tracks Cat B, jumped S$1,499 to S$57,501.

Meanwhile, Cat C, for goods vehicles, shot up S$2,001 to S$49,890; Cat D for motorcycles rose by S$290 to S$6,302.

For the next three months, there will be 10 per cent fewer COEs due to the lower number of deregistrations, caused by the increase in the COE revalidations of older cars.

Last week, it was announced that the August-to-October COE quota will be 25,843, with fewer COEs available in all five categories.

Cat A will have 4,016 COEs a month, down 9.4 per cent, with Cat B 2,672 COEs, or 8.6 per cent lower. Cat E will have 857 COEs, a 16.6 per cent reduction. Cat C will fall 23.2 per cent to 350 COEs monthly, and Cat D will be down 9.6 per cent to 718 COEs.

Some dealers said the cut in the coming COE quota had encouraged buyers to return to the showroom; prospective customers had stayed away for more than two COE tenders because of the recent price increases.

The sales manager of a popular Japanese dealership said: "They were worried that the shrinking quota will cause premiums to go up, so they decided to lock in their purchase at the then-prevailing COE level."

Nicholas Wong, general manager of authorised Honda distributor Kah Motor, said the premium increases were "not unexpected".

"After the quota announcement, we had more showroom traffic. It was not tremendous, but there was some anxiety because of the knowledge that the next round of COEs won't be expanding anymore."

However, he pointed out that the size of the new quota is actually "not far off" from the preceding quota from February to April 2016. "So in terms of depletion, it has not come down that much, therefore there is no cause for panic."

He also noted that the rate of COE revalidations may slow down "because conditions have changed". "Revalidations were high when the PQP (prevailing quota premium) was low - below S$50,000 - and before loan curbs were relaxed."

But now that the PQP amount and the new car downpayment are "not far off", owners will be be encouraged to scrap their old car and buy a new one. "When deregistrations go up, so will the COE quota."