More COEs for May-July, but no big price falls expected

SINGAPORE — The number of Certificates of Entitlement (COEs) entering the market continues its climb, with 15 per cent more COEs available in the next three months as the number of older vehicles being deregistered remains high. 

A total of 28,908 COEs will be available between May and July, or about 9,634 a month, with the commercial vehicle and big car categories (categories C and B, respectively) to have the biggest increases in quota, according to numbers released by the Land Transport Authority (LTA) on Friday (April 15).

But most motor traders interviewed felt the increase in quota is not significant enough to bring about a substantial decline in COE premiums, which have stabilised in the bidding exercises this year so far. 

The COE quota depends mainly on the number of vehicles deregistered. The number of deregistrations — and in turn the COE quota — is expected to stay high over the next three years, with figures showing a high number of vehicles on the road today close to their 10-year mark. 

LTA figures show that among cars, about 34 per cent of the vehicles on the roads as of March are between eight and under 10 years old. Contributing to the upcoming quota were the 31,130 vehicles that had been deregistered in the first three months of this year.

Among cars, the quota for Category B cars (above 1600cc or those with a maximum power output above 97kW) will see the biggest surge, with an average monthly quota of 2,924 COEs, an increase of about 20 per cent. The Open Category, which can be used for any vehicle type but is used mainly for large cars, will see a 15 per cent increase to 1,027 COEs monthly. 

For Category A cars (up to 1,600cc and those with a maximum power output not exceeding 97kW), there will be 4,433 COEs a month, up about 9 per cent.

The commercial vehicle category, which saw a sharp cut in quota for the past three months, will enjoy a 40 per cent bump, to 456 COEs a month. Motorcyclists, who have endured steep premiums in the past 12 months, will enjoy an 11 per cent increase in quota, to 794 COEs monthly. 

Mr Raymond Tang, 1st vice-president of the Singapore Vehicle Traders Association, did not expect any steep drop in premiums, as demand for COEs will continue to outstrip supply.

Noting that premiums are still in the “adjustment phase”, any fluctuations would depend on how car merchants spread their bids across the COE exercises, and economic sentiments that affect the number of the car orders. 

But Mr Ricky Tay, managing director of motor trader RTMT, believed there could be a “gradual softening” in car premiums over time, especially for Category B cars. 

“With the bleak economic outlook and increasing number of retrenchments, consumers will be more careful in buying cars,” said Mr Tay.

As for motorcycles, for which premiums reached S$6,503 in the last COE exercise, traders also expected minimum impact from the increased quota. 

Singapore Motor Cycle Trade Association president Tony Yeo said the greater number of COEs available still would not match the growth in demand over the last few months. He reiterated the need to create a separate category for motorcycles within the Open Category, to widen the pool of motorcycle COEs.  

Mr Wilson Phoon, director of motorcycle dealer AS Phoon, felt an increased quota would provide some measure of “relief that could help to moderate any COE price increases”. 

But with the uncertain economic climate, some car buyers may opt for two-wheelers instead, adding to demand. The growing demand for courier services also adds to the pressure, with businesses opting for motorcycles to save on costs, he added.