SINGAPORE — The “market correction” that car dealers had been expecting came to pass yesterday in the latest Certificate of Entitlement (COE) bidding exercise, as COE prices for bigger cars rebounded sharply and outstripped the premium for small cars.

As the authorities have yet to address loopholes that allow credit companies to continue offering up to full loans to car buyers, motor dealers TODAY spoke to said that the level of COE premiums has yet to stabilise.

The premium for Category B cars (1,601cc and above) jumped 27.2 per cent to S$73,900 while that for Category A (small cars of 1,600cc and below) continued to slide, falling 14 per cent to S$64,209.

The Open category — where COEs can be used for any vehicle but are often used for luxury cars — also rose by 12.8 per cent to S$73,301.

In the previous round of bidding on March 13 — the first since new car loan restrictions and higher taxes for bigger cars kicked in — COE premiums for Category B (cars 1,601cc and above) fell by 37.3 per cent to S$58,090, while premiums for Category A (cars 1,600cc and below) dipped by just 4.6 per cent to S$74,686.

This narrowed the price gap between big and small cars, and caused a surge in sales for luxury cars over the past fortnight, according to motor dealers.

Nissan agent Tan Chong Motors’ General Manager Ron Lim noted that after the surprise of the previous round, the outcome of the latest bidding exercise was “expected”.

“Basically the whole market has already been priced down ... that’s why we’re seeing today’s correction,” he said.

The significant rebound in premiums for big cars could be the result of demand shifting to this category after the last round of bidding, driving up prices “very aggressively”, he added.

“It’s more of normalising, last round was more of a one-off incident that Cat A ended up higher than Cat B,” Mr Lim said.

Singapore Vehicle Traders Association (SVTA) Honorary Secretary Raymond Tang said that “80 to 90 per cent” of the orders in the past fortnight were for Category B cars.

Referring to the one-off dip in prices of big cars, Mr Tang said: “Most consumers are very smart. They know that this is already very drastic — a drop of more than S$30,000. So most of the consumers rush in to buy.

“And I think those people who go in (can afford) to put a down payment of 40 to 50 per cent.

“So, they’re hoping to get cheaper cars as soon as possible.”

Similarly, SVTA President Neo Tiam Ting noted that more traders would have stepped in to bid for big cars this time round.

He reiterated that it was too soon to say when COE premiums would stabilise, given that this was just the second bidding exercise since the measures imposed by the authorities.

Moreover, loopholes in the financing restrictions have not been closed, he noted.

Category A premiums hit an all-time high of S$92,100 at the start of the year.

The premium for Category B cars breached the S$92,000 mark last month before the loan restrictions took effect.