Most COE categories see price dips

SINGAPORE — The story of the Certificate of Entitlement (COE) system continues to be one of demand continuing to outstrip supply, even with a record number of certificates up for bidding today (May 6). 

Nevertheless, premiums for most categories fell compared to the previous round of bidding: Category B premiums for big cars (above 1,600cc and 97kW) closed at S$77,600, falling marginally from S$78,001. In the Open Category, where the COEs can be used for any vehicle type but end up being used mainly for cars, premiums fell about 1.9 per cent to S$78,004.

Motorcycle premiums decreased about 4.3 per cent, from S$6,801 to S$6,512. Premiums for commercial vehicles, which include goods vehicles and buses, dipped about 5.5 per cent, from S$53,001 to S$50,098.

The only exception were the premiums for small cars: Category A (cars up to 1,600cc and 97kW) premiums rose by about 1.5 per cent from S$67,601 to S$68,589.

Compared to the previous bidding exercise two weeks ago, more bids were received across all categories. For example, there were 2,891 bids in Cat A, compared to 2,055. Cat B saw 1,631 bids, up from 1,525. In all, 5,974 bids were received for the 3,377 COEs on offer. In comparison, 4,571 bids were received at the previous exercise. Of these, 2,319 were successful.

The Land Transport Authority (LTA) announced last month that a bumper crop of COEs would be available from this month to July, following a big jump in vehicle deregistrations from January to March. There are two bidding exercises per month.

In all, 6,637 COEs would be up for grabs each month from this month to July, up by about 41 per cent compared with the monthly supply from February to April. This is the highest number of COEs available since February last year, when the LTA moved from releasing quotas every six months to doing so every three months to make the COE system more responsive to deregistrations.

Singapore Vehicle Traders Association (SVTA) vice president Eddie Loo said that the premiums for Category A were unaffected by the rise in COE supply, as there was still high demand for smaller cars. “People don’t really have a choice. Many of them bought their cars some 10 years ago when COE prices were still relatively low, and now have to deregister (their vehicles)... But they need to replace those cars,” he said.

He added that bidders could also be rushing to buy vehicles before stricter regulations for rebates and surcharges under the revised Carbon Emissions-Based Vehicle Scheme (CEVS) kick in on July 1. “Part of it is an emotional reaction. People are afraid the prices will go up higher, so they all rush to bid,” said Mr Loo.

Motor trader Ricky Tay said that the demand for cars in Category A from buyers seeking to replace their vehicles was too strong. “It is not proportionate with the number of COEs available. We can expect to see premiums for smaller cars go up slightly over the next couple of months, as the rush (for COEs) will continue. After July 1, things may cool off slightly,” he said.

On the premiums for motorcycles, Mr Wilson Phoon, director of motorcycle dealer AS Phoon, told TODAY that the motorcycle market saw “some resistance” when its COE premium surged to S$6,801 during the previous bidding exercise.