COE premiums for small cars hit four-month high

SINGAPORE — Certificate of Entitlement (COE) premiums for small cars hit a four-month high yesterday, as demand for them rose because bigger ones were subject to new taxes and car rental firms are buying vehicles in response to the growing popularity of car leasing.

COE premiums for small cars rose to S$73,100 from the previous S$69,903 to reach the highest level since March.

Under the Carbon Emissions-Based Vehicle Scheme, cars with high carbon emissions equal to or more than 211g CO2/km will incur a registration surcharge of between S$5,000 and S$20,000.

Mr Raymond Tang, Honorary Secretary of the Singapore Vehicle Traders Association, noted that a surcharge would be imposed on a majority of cars in Category B (1,601 cc and above) and buyers would instead turn to buying luxury makes in Category A (1,600cc and below).

Adding that there was a “mismatch” in demand and supply of COEs, CarTimes Managing Director Eddie Loo said its car-leasing business had doubled. He said: “Continental cars are going for 0 per cent down payments with the option to buy back, and this has created a lot of demand for the leasing option.”

While car dealers expect a marginal increase in the COE quota for the next six months — deregistration numbers for the first five months of this year have been higher than that of the corresponding period last year — they felt the premiums will continue to head north.

Mr Loo reiterated there was “no quick fix” to bring down COE prices “as long as there is a scarcity in supply”. Nevertheless, he did not expect COE premiums to exceed S$100,000, which he felt was the threshold for most buyers.

In recent weeks, automobile dealers have been enticing buyers with trade-in offers, freebies and pledging to hold prices despite fluctuations in the COE premiums. One dealer, Wearnes Automobile, even offered a “buy one, get one free” deal for a limited period, under which those who bought a new Volvo would get another pre-owned car free.