Singapore

Motorcycle COE premiums hit record high

Motorcycle COE premiums hit record high
TODAY file photo
COE prices close mostly higher in first bidding exercise of March 2017
Published: 4:07 PM, March 15, 2017
Updated: 5:28 AM, March 16, 2017

SINGAPORE — The Certificate of Entitlement (COE) premium for motorcycles soared to a record S$7,483 on Wednesday (March 15), beating the previous peak of S$6,889 in January last year. 

The bidding exercise, which closed on Wednesday, was the second since the introduction of a new tiered tax system for motorcycles last month. The first exercise, held late last month, saw the premium for motorcycles rise to S$6,801, up from S$6,412 in the previous exercise.

Market observers had noted that traders were reserving COEs they obtained from previous exercises — before the new Additional Registration Fee (ARF) system kicked in — for buyers of big bikes. The new system does not affect models registered with these COEs.

Mr Tony Yeo, a member of the Singapore Motor Cycle Trade Association, said that he had expected the rise. “Dealers are pushing it up so that the existing COEs they have on hand becomes affordable. They buy COEs in bulk and hoard them,” said Mr Yeo, who runs SYN Magdaco International. 

Nevertheless, Mr Eric Ng, who is the manager of Wing Fuat Trading, was surprised by the quantum of the spike. “I don’t think any buyer can accept this kind of increase,” he said. Already, he has fielded calls from customers who “cannot accept the price”.

Mr Eugene Mah, managing director of distributor Mah Private Limited, expects motorcycle COE premiums to fall gradually in the coming exercises. 

“Premiums should slowly come back down to a more normalised rate, as the knee-jerk reactions to the new three-tiered ARF settle down. And we hope things will settle down soon, as the higher premiums affect everyone — from consumers to dealers and distributors.”

In the Budget speech last month, Finance Minister Heng Swee Keat had announced that the ARF rate of 15 per cent would remain for motorcycles with an open market value (OMV) of up to S$5,000. The subsequent S$5,000 of a motorcycle’s OMV will incur an ARF of 50 per cent, and the remaining OMV above S$10,000 will draw an ARF of 100 per cent.

During the previous peak in January last year, industry traders had observed that small-car buyers, finding themselves unable to afford cars due to new loan curbs and high COE premiums, were turning to motorcycles and driving up demand for COEs in this category. 

In the latest bidding exercise, premiums were also mostly higher in other categories. Smaller cars (up to 1600CC and 97KW) saw premiums rising 2.75 per cent to S$50,789, while premiums for bigger cars (above 1,600cc or 97KW) climbed 5.29 per cent to S$53,300. COE prices in the open category, which can be used for any vehicle type, increased by 3.92 per cent to S$53,001. Only commercial vehicles saw a slide in premiums to S$49,002  — a dip of 1.62 per cent.

NUMBERS AT A GLANCE:

Cat A (Cars up to 1600CC & 97KW): S$50,789 (up from S$49,430)

Cat B (Cars above 1600CC OR 97KW): S$53,300 (up from S$50,621)

Cat C (Goods vehicles and buses): S$49,002 (down from S$49,810)

Cat D (Motorcycles): S$7,483 (up from S$6,801)

Cat E (Open category): S$53,001 (up from S$51,000)