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COE premiums for smaller cars rise 8.4% amid cut in supply

SINGAPORE — Certificate of Entitlement (COE) premiums for smaller cars rose 8.4 per cent in the latest bidding exercise, which saw a reduced quota for such vehicles as part of the Government’s zero vehicle growth policy which kicked in from this month.

SINGAPORE — Certificate of Entitlement (COE) premiums for smaller cars rose 8.4 per cent in the latest bidding exercise, which saw a reduced quota for such vehicles as part of the Government’s zero vehicle growth policy which kicked in from this month. 

At the close of the exercise on Wednesday (Feb 7), Category A premiums (cars up to 1,600cc and with a maximum power output of 97kW) climbed to S$40,000, up from S$36,890 in the previous bidding exercise.

The Land Transport Authority announced last month that the Category A COE supply will tumble 7.3 per cent from this month to April. This translates to an average of 3,115 COEs per month, down from 3,360 between November and January. 

Earlier, the authority had announced that the vehicle growth rate for Categories A, B, and D — covering cars and motorcycles — will be cut from 0.25 per cent to zero from this month. However, there will still be a slight increase in COE supply for Category B (bigger cars above 1,600cc and 97kW) as well as for motorcycles, due mainly to the number of de-registrations in the preceding quarter.

Apart from smaller cars, the COE premiums for motorcycles also went up in the latest bidding exercise. It increased by 5.6 per cent from S$8,001 to S$8,451 — setting a new record high. 

All the other categories saw premiums fall. 

For bigger cars, the premiums dipped from S$42,661 to S$42,322, while those for commercial vehicles (Category C) also declined from S$39,000 to S$38,303.

COE prices for the open category, which can be used for all vehicles except motorcycles, registered the largest drop of 9.3 per cent from S$44,000 to S$39,903. 

Mr Raymond Tang, managing director of car dealer Yong Lee Seng Motor, was not surprised by the climb in COE premiums for smaller cars, given that prices fell “tremendously low” at the last bidding exercise.

The dip in the supply of Category A COE could also have played a part, although Mr Tang noted that the reduction was not significant. He expects COE premiums for smaller cars to continue to hover in the region of S$40,000 until the middle of the year. But it could occasionally rise up to over S$45,000 during this period, he added. 

CarTimes Automobile managing director Eddie Loo said the increase in Category A COE premiums was steeper than expected, and this was at odds with the weak market conditions. Sales for all cars have tumbled between 20 and 30 per cent since December, he observed. He said that many dealers could be rushing to fulfil orders before Chinese New Year, which falls on Feb 16. 

“In the next bid, (premiums for smaller cars) will come down because a lot of people will be busy with the Chinese New Year holiday and a lot of showrooms will not be open,” Mr Loo said.

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