Passenger car COE premiums soften

Singapore

THE certificate of entitlement (COE) premiums for passenger cars slipped, but those for the other three categories rose in the second bidding exercise for May.

Category A, for cars below 1,600cc or 130 hp, fell S$869 to S$47,020; Cat B, for cars above 1,600cc and 130 hp, was S$1,854 lower at S$49,156.

But Cat C, for goods vehicles, was up S$700 to S$43,002, and Cat D, for motorcycles, was just S$1 higher at S$6,303. Cat E , the open category which currently tracks Cat B, climbed S$700 to S$49,700.

Some car dealers said the dip was expected, and pointed out that if not for the strong bidding of a well-known ride-booking company, COE premiums would have fallen further. That company is understood to have secured 870 COEs - 360 pieces each of Cat A and Cat B and 150 of Cat E. They amount to one-fifth of the 4,288 Cat A, B and E COEs available in Wednesday's tender.

One distributor who was not surprised by the fall in passenger-car premiums was Nicholas Wong, the general manager of authorised Honda distributor Kah Motor.

"The drop was not unexpected, but it was also not a lot," he said, adding that this was because those with unsuccessful bids in the previous round had made an effort to secure COEs this time. "They are clearing their order backlog," he added. He described the demand for new cars as "not very good".

He said: "The market went quiet after premiums rose for five consecutive rounds for Cat A, and three for Cat B. But with this latest fall, I expect buyers to come back into the market."

Alvyn Ang agrees demand has only been "average". Cycle & Carriage's director of multi-franchise operations, which deals in Mitsubishi, Kia and Citroen, said prospective buyers had expected COE premiums to fall with this new and bigger COE quota. The current COE quota is for the May-to-July period. But this has not happened. "As a result, those who are sitting on the fence are still sitting," said Mr Ang.

The managing director of a luxury dealership agreed, saying: "In general, people are holding back buying a new car." He said this is because the expectations of those who were anticipating a bargain with the expanding COE supply have not been met since February, the start of the previous quota. "The yo-yo effect, when prices drop, then rebound after buyers rush in, has also caused uncertainty; they don't know when is a good time to go in," he added.