Some motor traders are offering discounts of up to 17 per cent to entice buyers while certificate of entitlement (COE) prices for small cars are at a 21-month low.
At least four major traders here have cut prices for Category A cars with engine capacity of up to 1,600cc, a check by The Straits Times showed yesterday.
Volvo, for instance, is selling its popular V40 Turbodiesel at $119,999, at a discount of about 8 per cent, or $10,000, compared to its price at the previous COE tender.
Visits to Volvo's showroom have gone up by about 50 per cent since Tuesday's COE tender, which is "good for a weekday", said Mr Victor Kwan, managing director of Wearnes Automotive.
He expects an even bigger crowd during the weekend. "We expect dealers and consumers will take advantage of the current prices before they bounce back in the next round," he added.
COE premiums for small cars dipped by 15.9 per cent - the biggest drop across all categories - to $60,002 on Wednesday.
Premiums for larger cars above 1,600cc slipped by 6.7 per cent to $70,002, while open COE premiums dropped 11.3 per cent to $65,501.
The price drops were due to an increased supply of COEs and potential buyers holding off to see how premiums would be adjusted, said motor traders.
Other European brands like Renault and Volkswagen are also cutting prices.
Renault's Fluence sedan is retailing for $22,000 less than its price of $130,999 last month.
Japanese brands like Nissan and Honda also reduced their prices, by $4,000 to $9,000.
Tan Chong Motor general manager Ron Lim said he expects buyers to "start committing soon", even though some are still waiting to see if prices will drop further.
Other major brands like BMW and Mercedes will be releasing their revised price lists today, The Straits Times understands.
The change will, however, not affect the used car market so much, as the price gap between a used car and new car is still "too wide", said Mr Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association.
He also did not think the price cuts will have a big impact on overall car sales for now.
"There may be more COEs in a few years' time as a lot of cars are reaching the end of their 10-year lifespan, so many people are still waiting till then to buy a car."
Builder Chew Chin Hui, 36, intends to wait it out for a while. "I hope that (the COE price) will go below $50,000, so I can get a car that is within my price range."
