New COE quota to expand 20%

Singapore

THERE will be a huge spike in commercial vehicle certificates of entitlement (COEs) from next month as the overall COE quota expands 20.1 per cent to 31,708.

The May to July 2017 COE quota rises for the second straight quarter and leading the increase is Category C for goods vehicles and buses. The number of Cat C COEs soars 573 per cent or almost seven-fold to 2,168 each month for the next three months.

The Land Transport Authority said that this was due to the large number of deregistrations in the preceding quarter. "This clustering was due to the large number of Category C COEs that were renewed in 2007 due to a shortage in the supply of new Euro IV diesel goods vehicles," the authority explained in its announcement.

There will also be more Cat D COEs for motorcycles, up 31.1 per cent each month to 907.

There are more Cat E open category COEs as well, up 9.6 per cent at 1,055.

Only the numbers for Cat A "small car" and Cat B "big car" COEs shrink. There will be 3,797 Cat A COEs each month, down 7.5 per cent, and 2,641 Cat B COEs, down 2.7 per cent.

The announcement of the COE quota was made after the end of the first COE bidding exercise in April.

Premiums for passenger cars continued to rise, inching up despite what some dealers say is a weak market.

Cat A - for cars below 1,600 cc or 130 hp - rose S$235 to S$52,000, while Cat B - for cars above 1,600 cc and 130 hp - climbed S$405 to S$54,405.

Cat E - which currently tracks Cat B - was marginally higher, up S$55 at S$54,556.

But Cat C and Cat D were both lower. The motorcycle premium fell S$1,130 from the record high set two weeks ago to S$45,906, while the goods vehicle premium slipped S$492 to S$7,589.

Showroom traffic may have fallen after the previous spike in COE premiums, but Nicholas Wong, general manager of authorised Honda distributor Kah Motor, said that some dealers still had a "backlog" that has not been cleared.

"Four bids ago when COE fell to S$48,000, distributors collected a lot of orders and customers are now chasing for delivery," he said.

He added that even after two months, some of these orders have not been fulfilled because "there are simply not enough COEs to go after the private-hire companies entered the frenzy".

Mr Wong said: "In the past, without private hire, we could predict when we could secure a COE and deliver the car. But now, we won't be able to tell accurately."

As for motorcycle and goods vehicle COEs, one source had correctly speculated that the upcoming May to July 2017 quota would be bigger and hence, one reason for the dip in premiums.

He said that the motorcycle premium may have risen so high that prospective buyers are holding back their purchases, especially with more bike COEs expected when the contribution of 10 per cent of the motorcycle COE quota to the Open category COE quota ends.

Vincent Tan, managing director of established parallel importer VinCar, had also expected a bigger commercial vehicle quota because of higher deregistrations. "This is why people were not bidding as urgently."

Also dampening Cat C demand is the fact that not all commercial vehicle dealers have Euro 6 stock to sell yet.

The Euro 6 emission standard for diesel vehicles will supersede the current Euro 5 on Jan 1, 2018. But the impending changeover has disrupted the supply of commercial models because not all dealers who have run out of Euro 5 vehicles are ready to roll out their Euro 6 versions.