LTA to announce COE quotas every 3 months

SINGAPORE — Certificate of Entitlement (COE) quotas will be announced every three months, instead of six, under a move that the authorities hope will make the system “more responsive” to de-registrations.

“A shorter recycling period will enable better and more prompt matching of the number of new COEs to be issued to replace de-registered vehicles,” the Land Transport Authority (LTA) said.

The new policy, which took immediate effect, was announced in tandem with the monthly quota from next month to April, which will see fewer COEs made available for all categories except commercial vehicles, compared with the period between August last year and this month.

The quotas for Category A (cars up to 1,600cc) and Category B (cars above 1,600cc) were reduced by 1.5 per cent and 6 per cent, respectively. The quota for the Open Category — where COEs can be used for any vehicle type, but are mainly used for big cars — was cut the most, by almost 27 per cent.

The total quota available from next month to April is 9,127. This translates to a monthly COE quota of about 3,043 for all categories combined —about 5 per cent higher compared with the 2,884 monthly quota that would have been allocated under the previous policy, the LTA noted.

Nevertheless, National University of Singapore Business School Professor Ivan Png noted that a more responsive system could also lead to a lower supply of COEs when de-registrations are on a downward trend. “There will come a time when de-registrations start to fall, then this new policy of reducing the lag will have the effect of making fewer COEs available and, therefore, COE premiums will be higher,” he said.

Motor traders whom TODAY spoke to said the new system would have less impact on COE premiums, compared with the additional categorisation criterion of engine power output — announced in September and set to kick in next month — that will result in dozens of luxury car models moved from Cat A to Cat B.

The LTA said the latest move was suggested by some industry players during the COE public consultation sessions held in the middle of last year.

The quota period was shortened to six months instead of a year in 2010, when the methodology was amended to base it on actual de-registrations instead of projected ones.

“The intention then was to shorten this further in due course to make the system even more responsive,” the authority said.

While some motor traders welcomed the tweak — saying it will stabilise COE premiums — others argued that it could mean more fluctuations as new quotas are announced more frequently.

“It may become a roller-coaster ride,” said Singapore Vehicle Traders Association Secretary Raymond Tang.

The abrupt nature of the latest change in a series of recent policy moves affecting the vehicle market was also unsettling, said Mr Eddie Loo, Managing Director of Car Times Automobile.

Citing examples such as loan curbs and the change in COE categorisation that were rolled out last year, he added: “We do not know what the Government will do next and what to expect.”

On the timing of the change, the LTA said it was introduced at an appropriate juncture, given the “generally rising vehicle de-registration numbers in recent months and with the trend likely to continue until about 2016”.

Amid such a trend, a three-month recycling period would be more responsive than a six-month system, it said. “A later change would delay the benefits to the public of a more responsive quota system,” the LTA added.

It explained that “announcing the change earlier without providing the actual COE quota numbers, or announcing a further review without being definite, was assessed to be not advisable as it might create unnecessary uncertainty in the market”.

“The change is a refinement to the current methodology, not a major modification to the system,” the LTA reiterated.

Mr Ron Lim, General Manager of Tan Chong Motor, said most buyers will adopt a “wait and see” stance in the next few bidding exercises.

Nevertheless, Motor Traders Association President Glenn Tan said he expects upward pressure to ease on COE premiums for small cars.

“There can’t be an infinite number of people who can put down S$100,000 as a down payment for a car — there’s a limit,” said Mr Tan.