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Strong rebound expected for small car COE premium

Car showrooms packed after sharp fall two weeks ago, but dealers see prices rising by up to S$7,000 from S$36,001

Nicholas Wong, general manager of authorised Honda distributor Kah Motor, said his showrooms were "very packed'' with buyers after the COE result and are "still packing'' them in.


THE unexpectedly large slide in the small car certificate of entitlement (COE) premium has attracted huge crowds to auto showrooms, but some distributors don't expect Category A to shoot back up tomorrow beyond last fortnight's level.

Two weeks ago, the Cat A COE premium fell S$6,899 to a seven-year low of S$36,001.

Cat B for bigger cars was also lower, but it dipped just S$2,000 to S$49,000, while Cat E - the open category which currently tracks Cat B - was S$1,995 lower at S$48,005.

As a result, sticker prices of Cat A models were cut by S$5,000 to as much as S$10,000.

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For example, the price of a basic Toyota Corolla Altis was adjusted down from S$99,988 to S$89,988.

But dealers see Cat A rebounding in tomorrow's bidding exercise, by up to S$7,000.

The sales manager of a volume Japanese make said that over the past two weekends, his company collected more than double the usual amount of orders.

He said that the strong interest was witnessed along the entire stretch of Leng Kee Road, adding: "I hear some brands tripled their bookings.''

When asked if his own showroom had been full, he said with a laugh: "It wasn't just full, it was a big rush.''

He explained that the majority of his customers were replacement buyers who have been clinging on to their ageing rides.

He added: "They have been waiting all this while for COE prices to drop. They are lucky. There are some who could not wait and revalidated their car's COE; they are now rueing the lost opportunity.''

Nicholas Wong, general manager of authorised Honda distributor Kah Motor, said his showrooms were "very packed'' with buyers after the COE result and are "still packing'' them in.

Cat A Honda prices were reduced by S$4,000 and orders rose by "30 to 50 per cent''.

But Mr Wong declined to reveal how much he expects the COE premium to rise by, except to say: "It will definitely go up.''

When asked if the premium will bounce back up to its previous level of about S$42,000, Ron Lim, general manager of authorised Nissan distributor Tan Chong Motor Sales, replied: "That's the big question mark. The whole Cat A market has been strong.''

But he believes that because of the size of the price cuts, most dealers will have limited margins to bid high.

This could cap the Cat A premium at S$40,000 to S$41,000.

Mr Lim said: "Hopefully, if everyone is sensible, it won't go back up to S$42,000. And with such a huge backlog, I don't think any dealer will be able to get 100 per cent of his bids, so it will probably have to be spread out over the next few tenders.''

According to him, the lower Cat A premium has driven buying sentiment to close to a 200 per cent increase in sales, adding that the launch of the new Nissan Qashqai also boosted demand.

But the party may have already come to an end. Most dealers have been revising prices upwards, by S$1,000 to S$2,000.

At a Korean dealership with its range of bread-and-butter models, one salesman said the hikes have dampened buying interest.

He added: "Anyway, some dealers have run out of stock.''

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