COE premiums for cars at 8-year lows

SINGAPORE — Certificate of Entitlement (COE) premiums for small and large cars fell to the lowest in over eight years in the latest bidding exercise, which also saw prices dipping in other categories.

At the close of the exercise on Wednesday (July 4), Category A (cars up to 1600cc and engine power not exceeding 97kW) premiums plummeted by 27 per cent to S$25,000 from S$34,110 in the previous bidding exercise, marking the lowest level since March 2010 when premiums were S$21,421.

Similarly, large cars (cars above 1600cc or 97kW) also saw premiums dipping 9 per cent from S$33,900 in the previous bidding exercise to S$31,000 – the lowest since March 2010, when the premium was S$25,190.

In other categories, goods vehicles and buses saw COE premiums decreasing by nearly 3 per cent to S$31,092, while motorcycle premiums went down by about 5 per cent to S$6,514, compared to S$6,889 in the previous bidding exercise.

For the Open category, which can be used for any types of vehicles, premiums went down by nearly 10 per cent to S$31,001.

Motor traders, who are anticipating bigger crowds at showrooms this weekend, were not surprised by the multi-year lows for car COE premiums, given the steady decline since the start of this year.

A key factor was the apprehension among buyers towards a change to the Vehicular Emissions Scheme (VES) which took effect this month.

From July 1, particulate matter will be included in the list of pollutants measured in the scheme, under which tax rebates or surcharges are given for new cars based on the amount of tailpipe pollutants released.

With particulate matter in the mix, more cars including hybrid ones are likely to incur tax surcharges of up to S$20,000.

The slow market also prompted dealers to hold back from importing new cars, thus pushing car prices downwards.

Yong Lee Seng Motor managing director Raymond Tang said that since COE premiums are a "demand and supply game", traders are still trying to get a good gauge of demand and some lowered their bids to keep COE prices low.

Mr Jeremy Soh, director of used vehicle trader Inchcape Pre-owned, said buyers "are waiting to see how low COE prices can really go, before they start opening up their wallets".

"They might feel less of a pinch compared to if COE prices are high and, on top of that, having to pay the surcharge. So, with the latest prices, you can expect showrooms to be packed this weekend," added Mr Soh, who is also honorary secretary of the Singapore Vehicle Traders Association.

Mr Neo Tiam Ting, president of the Automobile Importer and Exporter Association (Singapore), expects COE prices to stay low as consumers are still doing their sums and factoring in the VES surcharge.

"This benefits buyers at the end of the day. But the latest drop in car prices could be attractive and push up demand and COE prices next time round. So, they need to be smart as to when they should come into the market," he said.

NUMBERS AT A GLANCE:

Cat A (Cars up to 1600CC & 97KW): S$25,000 (down from S$34,110)

Cat B (Cars above 1600CC OR 97KW): S$31,000 (down from S$33,900)

Cat C (Goods vehicles and buses): S$31,092 (down from S$32,001)

Cat D (Motorcycles): S$6,514 (down from S$6,889)

Cat E (Open category): S$31,001 (down from S$34,400)