COEs rise across the board

SINGAPORE — Certificate of Entitlement premiums for commercial vehicles rose by 20 per cent yesterday — surprising analysts with the extent of the hike even though they had predicted a rush for COEs in Category C vehicles in the face of an impending cut in supply.

Premiums for goods vehicles and buses rose to S$52,010 in the bidding exercise which closed yesterday — a week after new quotas for the August-to-October period were announced, which will see numbers for vehicles in Cat C shrink by a third. Premiums for other categories also registered increases, but analysts were not too surprised by the numbers.

Industry observers say the sharp jump in Cat C premiums could be due to dealers rushing in to buy extra COEs before the supply crunch kicks in.

While they predict premiums will continue their upward trend, the extent of the rise may also depend on the take-up rate of the Early Turnover Scheme (ETS), which encourages the replacement of old commercial diesel vehicles with cleaner ones.

Dr Park Byung Joon, head of the urban transport management programme at SIM University, said most of the reduction in the Cat C quota was from the adjustment of the ETS, which means that some demand for vehicle replacement has been satisfied.

But the “huge hike” of 20 per cent means the demand for new vehicles in Cat C is quite strong, coming on top of the demand for replacing old vehicles. This may push more owners of old vehicles to replace their vehicles through the ETS, he said.

Mr Ricky Tay, director of RTMT Motor, said the market “over-reacted” as dealers bid higher to secure COEs “as a stand-by”, since COEs in Cat C are transferable.

Ms Jessica Ang, director of Jack Cars Enterprise, believes dealers “are scared that prices would rise further, so they want to come in (to the market) first to lock in their prices”. Future premiums will depend on demand and whether there are new models coming in, she added.

Mr Thomas Ng, director of Hua Sun Construction, said he will continue to put off buying a new van, as he is willing to spend only about S$15,000 to S$20,000 on the COE. While his business can afford to wait, other smaller companies will be deeply affected, he said. “Some of them have very little profit margins, so how can they afford a new vehicle at S$100,000?”

COEs for small cars rose 1.5 per cent to S$62,890, while premiums for big cars rose 0.2 per cent to S$65,001. For the Open category, premiums closed at S$65,002, an increase of 3.2 per cent. Dealers say they expect COE prices to remain stable for Cat A and B for now.

Singapore Vehicle Traders Association honorary secretary Raymond Tang said the number of bids for Cat A — more than double the available quota — shows there is still a lot of backlog. “Dealers are trying to bid slowly … but it proves the supply for COE is still insufficient,” he added.