SINGAPORE — After a brief respite earlier this year following the introduction of drastic car loan curbs, Certificate of Entitlement (COE) premiums across the board — led by the big car and Open categories — continued to rebound in the latest bidding exercise, which closed yesterday afternoon.

Premiums for the Open Category, which can be used for any vehicle type but end up mostly used for cars, recorded the most significant rise of 9.21 per cent, from S$76,000 to S$83,001 — the highest since premiums fell in the months after restrictions on car loans were announced in late February.

Big car premiums for cars above 1,600cc (Category B) finished 9 per cent higher at S$81,751, a third consecutive rise for the category. Premiums for small cars (Category A) rose 3.87 per cent from S$67,301 to S$69,903, the highest in seven bidding exercises.

After the Government implemented the restrictions in February, which were partly aimed at bringing down COE prices, the premiums fell to the S$60,000 range. Before that, COE premiums for small cars hit a high of S$92,100 in January, while those of big cars were S$96,210.

Motor traders said the surge in prices was fuelled by factors such as a backlog of orders and the Carbon Emissions-based Vehicle Scheme, (CEVS) which will kick in next month. Under the CEVS, cars with high carbon emissions equal to or more than 211g CO2/km will incur a registration surcharge of between S$5,000 and S$20,000.

This has led to aggressive bidding by dealers of makes with higher engine capacities in order to secure their bids in this month’s last exercise, said Singapore Vehicle Traders Association President Neo Tiam Ting.

Mr Ron Lim, General Manager of Nissan agent Tan Chong Motors, said that uncertainty over last month’s announcement that the COE system will be tweaked to make car ownership more equitable, as well as a general expectation that COE quotas will be further cut in August, has led to “speculative and unnecessary panic buying”.

He said: “Dealers of certain makes in Category A, especially if they are the ones that could possibly be reclassified, will take the opportunity of this uncertainty to push more of their sales, and this will in turn drive up COE prices.”

A rush to meet the sales targets at the half-year mark has also led dealers, particularly for luxury continental makes with larger margins, to lodge higher bids in the big car and Open categories, he added.

Moving forward, the traders expect the CEVS surcharge to “ease the pressure” on premiums for bigger cars next month, while Category A premiums are unlikely to budge, as dealers might capitalise on the widening price gap between categories A and B to boost sales.

Dealers also called on the Government to step in by announcing any tweaks to the COE system soon. Said Mr Lim: “The longer they drag, the longer the system is subject to uncertainty and speculation.”