Despite a slight dip in bids submitted, premiums for cars and trucks ended appreciably higher in the exercise, which ended yesterday.

The COE price for cars up to 1,600cc in engine size, like the Toyota Vios, rose by 7.1 per cent to hit $12,856.

Cars above 1,600cc, like Mercedes-Benz's E-class and Audi's A6, took a much bigger hit. Their COE price rose by 17.4 per cent to end at $15,510.

The premium for the open category COE, which can be used for any vehicle but ends up mostly with car buyers, climbed 13.6 per cent to close at $15,110.

The price jumps - the biggest since September - are significant as the market is usually in a lull right after Chinese New Year.

The COE price for commercial vehicles is now as high as that for cars. It rose 15.4 per cent to hit a four-month high of $15,002.

Motorcyclists were the only ones who got a reprieve. The cost of motorcycle COEs fell 4.8 per cent to end at $951.

Motor traders expect the supply of car COEs to fall by 10 to 30 per cent in the quota year starting April. Some reckon commercial vehicle COE supply will shrink more, as a spate of $1 COEs in this category a year ago led thousands of owners to extend the lifespans of their older vehicles instead of scrapping them.

Fewer vehicles scrapped translates to fewer replacement COEs released.

Most traders were thus not surprised by yesterday's results. In fact, some are bracing themselves for even higher premiums in coming tenders.

'It is to be expected,'' commented Mr A.C. Neo, marketing director of Nissan agent Tan Chong International. 'People are buying in advance because they are afraid that COE prices will rise.''

Industry observers said yesterday's rally might also have been fuelled by speculators hoarding COEs in anticipation of an expected supply crunch.

But car dealers were undecided about what they should do about sticker prices. Although COE prices have risen substantially, the announced 10 percentage point cut in the Additional Registration Fee - the main car tax - kicks in next month, neutralising the effect on some car prices.

Mr Vincent Ng, product manager at Honda agent Kah Motor, predicted that car prices will 'remain unchanged at best''.

'People who have been sitting on the fence should go ahead and buy now,'' Mr Ng said. 'After April, COE prices will be on the uptrend.''

christan@sph.com.sg