COE quota to shrink for 2nd straight quarter

THE certificate of entitlement (COE) quota shrinks for the second straight quarter, contracting 6.2 per cent to 24,234 for the period between next month and January 2017.

Of the five COE categories, the number of available COEs will go up in only two - and both are for non-passenger cars.

Category C, for goods vehicles and buses, will enjoy an increase of 3.1 per cent to 361 COEs per month; Cat D, for motorcycles, will rise 3.2 per cent to 3,688 COEs each month.

On the other hand, Cat A, which is for cars below 1,600 cc and 130 hp, will suffer the biggest cut of 8.2 per cent to 3,688 COEs each month.

Cat B, for cars above 1,600 cc or 130 hp, will dip 7.0 per cent to 2,486 COEs every month. Cat E, the open category for which the premium currently tracks that of Cat B, slides 6.8 per cent to 799 COEs monthly.

The current August-to-October 2016 quota is already 10.6 per cent smaller than in the May-to-July 2016 period because of the slower rate of vehicle deregistrations.

In fact, the number of deregistrations fell below 4,000 last month - the first time it has done so in a year.

The number of COE revalidations (from owners choosing to continue driving their 10-year-old cars for another five or 10 years) also appears to be holding firm; car distributors said they thus saw the dip in the upcoming quota coming. Alvyn Ang, Cycle & Carriage's director of multi-franchise operations, said: "I am not surprised that the quota is smaller."

The number of replacement COEs from vehicles deregistered in the preceding three-month period is the main component contributing to the size of the COE quota. In this case, this was the July-to-September 2016 period. The other components contributing to the size of the COE quota are the provision for a 0.25 per cent per annum vehicle growth based on the vehicle population as at Dec 31, 2015, as well as adjustments for changes in the taxi population, the replacement of commercial vehicles under the Early Turnover Scheme and expired COEs.

As for future premiums, Mr Ang believes the Cat A premium will be maintained at the current level. This is because it had already risen by about S$1,500 in the last round, ahead of TheCars@Expo event later this month, when premiums are likely to increase in tandem with car sales.

As for the Cat B premium, Karsono Kwee, executive chairman of the Eurokars Group, expects it to also be "stable" going forward. "The market for high-end cars is still very soft, so Cat B will be around the current price," said Mr Kwee, who represents the Rolls-Royce, Porsche, Mini and McLaren brands here, among others.