Commercial vehicle COEs soar before cut in quota

SINGAPORE — Adding to the woes of business owners facing rising costs, Certificate of Entitlement (COE) premiums for commercial vehicles continued to climb steeply yesterday — hitting their highest level this year in the final bidding exercise before the quota for such vehicles is reduced for the next three months.

Premiums for Category C (goods vehicles and buses) rose 6.3 per cent to S$61,000, from S$57,389 at the last bidding exercise two weeks ago.

There were marginal changes in COE prices in most other categories: Premiums for small cars (up to 1,600cc and 97kW) went up from S$63,880 to S$63,990, while premiums for the Open Category — which can be used for any vehicle type but end up being used mainly for big cars — inched up to S$72,201, from S$$72,003.

COE prices for big cars (above 1,600cc and 97kW) dipped from S$72,180 to S$72,002.

There was a sharp drop in motorcycle premiums, which had risen for seven consecutive bidding exercises since July. In the latest exercise, they fell 8.1 per cent to S$4,412.

Last week, the Land Transport Authority (LTA) released its COE quota for the next three months. The supply of COEs for all categories will be increased, except for Category C. The new monthly quota for vehicles under this category will be substantially lower — at 282, compared with 515 from August to this month.

Motor traders whom TODAY spoke to attributed the rise in commercial vehicle premiums in the latest exercise to a rush by buyers anticipating even higher premiums from next month, due to the cut in supply. But their opinions were split on whether the prices would go up even more in the months ahead.

CarTimes’ managing director Eddie Loo said he expects Category C premiums to stabilise because business owners are unable to absorb higher COE prices in the current economic climate. However, both RTMT Motor director Ricky Tay and Singapore Vehicle Traders Association honorary secretary Raymond Tang said there is room for commercial vehicle premiums to rise higher, possibly up to S$65,000.

Noting that Category C premiums peaked at S$76,310 last year, Mr Tang said larger companies that buy vehicles such as buses will have the capacity to absorb higher premiums.

Mr Tay said he was concerned the premiums could get out of hand and result in businesses passing on the higher costs to consumers.

Last week, the LTA also announced that it will slash the annual vehicle growth rate by half, to 0.25 per cent from February next year to January 2018.

To maintain a more stable COE supply in each category under a lower vehicle growth rate, the LTA said it will, from February, cut the contribution — from 15 per cent to 10 per cent — from the other categories to the Open Category.

Mr Tang noted that this move, when in place, would increase the COE supply for Category C and help moderate premium levels.