Singapore Vehicle Traders Association president Mr Neo Nam Heng said he found the adjustment 'quite surprising'.

He pointed out that the number of vehicles scrapped ? the main determinant of COE supply ? had shrunk significantly this year.

'Up to August, the average monthly figure is less than 6,500. But even with the adjustment, there will be nearly 6,900 replacement COEs per month,' Mr Neo said.

Commercial vehicle buyers and sellers will bear the brunt of the adjustment. There will be 30 per cent fewer COEs for vans, trucks and buses for the next six months.

The next biggest cut was for the Open category COEs, which can be used for any vehicle type but ends up mainly for cars. The reduction here is 13.9 per cent.

COEs for cars up to 1,600cc will contract by 9.6 per cent, while certificates for cars above 1,600cc will remain unchanged.

Motorcycle COE supply will shrink by 8.1 per cent.

The adjustments to individual categories differ because the pattern of vehicles scrapped differs. The exercise addresses over- or under-supply of COEs every six months so that changes do not lead to huge fluctuations.

As the overall reduction is on the whole smaller than most expected, market observers reckon COE premiums going forward would not change much.

Motor Traders Association president Ms Tan Kheng Hwee said: 'We believe this will mean relative stable car prices for the next six months and COE prices should largely fluctuate between $13,000 and $18,000 ? much like what it has been for most of 2008.'