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COE prices rise again, raising questions over recategorisation

SINGAPORE — Certificate of Entitlement (COE) premiums rose across the board except for commercial vehicles at the end of the latest bidding exercise yesterday. Premiums for Category A, for small cars, rose 2 per cent to close at S$78,602, while those for the bigger cars, in Category B, went up by 2.71 per cent to S$82,900.

COE results for March second open bidding exercise.

COE results for March second open bidding exercise.

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SINGAPORE — Certificate of Entitlement (COE) premiums rose across the board except for commercial vehicles at the end of the latest bidding exercise yesterday. Premiums for Category A, for small cars, rose 2 per cent to close at S$78,602, while those for the bigger cars, in Category B, went up by 2.71 per cent to S$82,900.

The upward trend of COE premiums over the past few exercises has raised questions among dealers and industry observers about the Land Transport Authority’s (LTA) move last month to recategorise cars with more than 130bhp under Category B. Those that TODAY spoke to were split over the effectiveness of this move, with some saying it might take about six months for it to be apparent. Dr Park Byung Joon, Head of the Urban Transport Management Programme at UniSim’s School of Business, said that without the recategorisation, COE prices for Category A could have been as high as those for Category B, or higher, as seen in previous occasions.

While the LTA has said the change was made to allow Category A to better cater to the mass market, traders pointed out that several luxury makes have remained in this category in the latest bidding exercise, thus pushing up its premiums. In the LTA’s data on the cost for cars registered last month, eight Mercedes models and six Volvo models from Category A were sold.

Further, dealers say luxury car brands have been bringing in a range of diesel and low-powered models that fall below the 130bhp cap for Category A.

Tan Chong Motor General Manager Ron Lim said: “(Luxury makes still present in Category A) are enjoying good sales so, inevitably, this will put pressure on the COE premiums, as they have the bidding power. Especially after the last round, when the LTA came out to say that the reclassification worked, so that was like giving them the green light to go all out.”

Responding to TODAY’s question on whether the LTA would consider removing luxury makes from Category A to make the recategorisation more effective, a spokesperson said it was not its intention to “drastically restrict” the types of car models in this category. “While the intent is to adjust Category A so it remains primarily for mass-market models, we also do not want to set such strict criteria that the choices of car buyers are drastically restricted,” she said. “We expect that the market will evolve over time ... We will monitor registration trends and review car ownership policies, if necessary.”

CarTimes Automobile Managing Director Eddie Loo said premiums for this bidding exercise might have gone up also because dealers were going all out to secure their bids before the emissions standard for petrol vehicles is revised to Euro IV from April 1.

Others, such as Singapore Vehicle Traders Association Honorary Secretary Raymond Tang, said: “As long as supply is not enough, the premiums will still go up.”

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