Commercial vehicle COE prices rebound from six-year low

SINGAPORE — Certificate of Entitlement (COE) prices for commercial vehicles rebounded from their six-year low at the wrap of the latest bidding exercise on Wednesday (May 24), bucking the downward trend across all other categories.

The COE premium for Category C (goods vehicles and buses) climbed 17.6 per cent to S$30,600, vaulting from the S$26,029 recorded in the previous exercise.

COE premiums tumbled in the other categories, with Category A for small cars (up to 1,600cc) recording the largest dip of 9 per cent to hit S$46,489. Premiums for big cars (above 1,600cc) dipped 4.35 per cent from S$55,414 to S$53,001 in Category B. Also dropping were premiums for motorcycles, which fell by S$200 to S$6,101.

The Open Category — which can be used for all vehicle types except motorcycles, but winds up mostly for big cars — saw premiums at S$52,000, shaving 5.8 per cent from S$55,000 in the previous bidding exercise.

Commenting on the rebound in Category C prices, Mr Raymond Tang, managing director of Yong Lee Seng Motor, said that there was a “rush” into the market to replace old vehicles, since prices plummeted by 42.3 per cent in April’s second bidding exercise. “When there are so many orders, the COE will definitely climb,” he explained.

Mr Tang expects the momentum to stay, since the current premium is still relatively low compared with the levels seen in recent years, when prices have hovered in the region of more than S$40,000 or S$50,000. 

Demand, in fact, might even be stronger in the next few exercises because bidders may worry that “if I don’t buy now”, premiums may rise “even higher”, he added.

Automobile Importer & Exporter Association (Singapore) president Neo Tiam Ting, however, expects prices to drop slightly in the coming exercises, as demand starts to peter out. 

He pointed to “packages” with reduced prices offered by several distributors since last month, when the Land Transport Authority (LTA) announced a bumper supply of COEs for commercial vehicles, which kicked in this month. He said the majority of these buyers would have secured their COEs after the latest exercise. “Moving forward ... the stress (on the market) will be reduced,” Mr Neo said. 

Last month, the LTA said that the quota for Category C would be cranked up from an average of 322 monthly between February and April to 2,168 from this month to July.

The sharp increase was because of the large number of de-registrations in the preceding quarter, which in turn arose from the high number of COEs renewed in 2007, the authority explained previously. Back then, there was a shortage in the supply of new Euro IV diesel goods vehicles, leading to many COEs being renewed.