Next quarter’s COE quota to shrink, prices predicted to remain high

SINGAPORE — Fewer Certificates of Entitlement (COEs) will be available in the next few months across all vehicle categories, after consecutive increases in quota over the previous quarters.

The Land Transport Authority (LTA) said on Tuesday (July 12) that 25,843 COEs would be available from August to October, or 8,613 a month. 

This is about a 10 per cent drop from the 28,908 COEs available from May to July, although still higher than the quota allocated for the period from February to April (25,210).

Taking the biggest hits for the upcoming period are the commercial vehicle and open categories.

The COE quota for commercial vehicles will see the biggest dive of 23.3 per cent, down to 350 a month. 

The open category, which is for any vehicle type but used mainly for large cars, also sees a big dip in quota by 16.6 per cent, or 857 COEs available monthly.

For Category A cars (up to 1,600cc and those with a maximum power output not exceeding 97kW), it will be a 9.4 per cent drop (4,016 COEs monthly), while the quota for Category B cars (above 1,600cc or above 97kW) will see a 8.6 per cent decline (2,672 COEs a month).

For motorcycles, the quota will fall by 9.6 per cent, to 718 COEs monthly. 

Car traders interviewed by TODAY predicted that the fall in quota would not lead to a substantial surge in COE prices, which would maintain at the current high levels.

The COE quota depends mainly on the number of vehicles deregistered. The number of deregistrations — which raises the COE quota — is expected to stay high over the next three years, with figures showing a high number of vehicles on the road with COEs close to expiring at their 10-year mark.

Mr Raymond Tang of Yong Lee Seng Motor, who is also first vice-president of the Singapore Vehicle Traders Association, said that the marked drop in quota was due to the “tremendous increase” in people choosing to renew their vehicles’ COEs over the first half of this year, instead of buying new cars and getting new COEs. 

If the demand for COEs remains strong, the prices might continue to “shoot up”, especially for Category A cars, he said. 

“We can see that consumers are still buying cars with COEs (that expire in) two or three years, or newer used cars, because they feel that the COE prices are still high ... I think the next COE exercise will be very interesting.”

In May, three years after it imposed loan limits on motor vehicle financing, the Monetary Authority of Singapore (MAS) announced that it would relax the restrictions, citing the sustained moderation in COE prices that helped to ease inflationary pressures.

Mr Eddie Loo of CarTimes Automobile pointed out that COE prices are still at a “record high” due to car rental companies pushing up the premiums, but given the relaxing of the MAS regulations that would help make cars more affordable, the demand for Category A cars would still be high, he said. 

These buyers would still be “hovering and waiting” on the sidelines for the right time to get in the  market. 

On the shrinking COE quota for commercial vehicles, Mr Loo said that it might be “worrisome” for small companies buying vans, given its all-time high prices, and he urged for more government intervention.

Agreeing, Mr Jeremy Soh, Singapore Vehicle Traders Association’s honorary secretary, said: “It will bring people sitting on the sidelines, waiting for the big drop, to get into the buying process … It’s slowly becoming a reality that in the short-term, there won’t be a huge drop in COE prices.”