SINGAPORE — Bucking the pattern of previous years, Certificate of Entitlement (COE) premiums for cars tumbled in the final bidding exercise of the year on Wednesday (Dec 20).

The industry usually sees a jump in premiums at the end of the year as agents rush to meet sales and performance targets, but dealers said apprehension of stricter emission rules taking effect next year caused the drop in car COE premiums, which was also seen earlier this month.

Category B premiums (for cars above 1,600cc & 97kW) dropped 12.5 per cent from the previous bidding exercise to S$47,002, the lowest since December last year. COE premiums for Category A (cars up to 1,600cc & 97kW) fell 9.8 per cent to S$38,200.

Industry players have held back on new stock due to the uncertainty over how new emission standards would play out, motor dealers said.

Dealers may have adopted a conservative stance and used COEs clinched in earlier bidding exercises to clear their stock of cars that may be affected by the new Vehicular Emissions Scheme, said Mr Neo Tiam Ting, president of the Automobile Importer & Exporter Association (Singapore).

From January 1, cars will be banded under the new scheme that takes into account four more pollutants apart from carbon dioxide — nitrogen oxides, particulate matter, carbon monoxide and hydrocarbons — which will see car owners forking out higher surcharges for many models.

The Honda Civic saloon, for instance, currently benefits from a S$5,000 rebate under the Carbon Emissions-Based Vehicle Scheme but will lose it when stricter VES rules kick in next year. Similarly, the Toyota Harrier is set to incur a S$10,000 surcharge under the new scheme in January.

"This is a transition period. Some consumers may not know how much the car models they are eyeing may be affected by and are waiting on the sidelines. Dealers, on the other hand, may be in the midst of replenishing stock of cars compliant with the Euro VI vehicle emission standards," said Mr Neo.

The stricter Euro VI standards, which spell out the European Union's latest guidelines on tailpipe gas emissions, came into force for petrol vehicles in September.

Yong Lee Seng Motor managing director Raymond Tang said the drop in COE premiums for cars would partially offset surcharges from the more stringent emission standards.

Agreeing, Mr Ricky Tay, the managing director of Volkswagen Group Singapore, said: "The adjustment in COE came earlier than expected and is good news for the consumers."

Large private hire companies Grab and Uber are approaching saturation and no longer buying as many cars, which may also have led to the softening of COE premiums, he added.

"The current prices are more reflective of the true premiums that genuine buyers are willing to pay," he said.

Dealers were mixed on how premiums will move next. While some expect a rebound as early as January, others foresee prices falling by a further 30 to 40 per cent.

"Premiums could drop to around S$20,000 and it may take a few months for uncertainty to ease and before buyers come into the market, pushing prices up again," said Mr Neo.

Mr Eddie Loo, managing director of CarTimes Automobile, said the industry may see "more extreme" price movements next year. "The job market is uncertain and the economy is not fantastic… Some people may be holding off buying cars for a while," he said.

Mr Tang, on the other hand, expects premiums to climb from January as prospective buyers enter the market with the hope of getting a new ride at a "better bargain" before Chinese New Year.

Wednesday's bidding exercise also saw premiums in the Open Category, which can be used for any type of vehicles besides motorcycles, tumble 11.6 per cent to S$48,011.

Premiums for goods vehicles and buses (Category C) went up by 7.4 per cent to S$45,112, after sliding 27 per cent in the last round. Premiums for motorcycles (Category D) went up 14.5 per cent to S$7,501.

NUMBERS AT A GLANCE:

Cat A (Cars up to 1600CC & 97KW): S$38,200 (down from S$42,339)

Cat B (Cars above 1600CC OR 97KW): S$47,002 (down from S$53,711)

Cat C (Goods vehicles and buses): S$45,112 (up from S$42,000)

Cat D (Motorcycles): S$7,501 (up from S$6,552)

Cat E (Open category): S$48,011 (down from S$54,334)