COMMERCIAL VEHICLES

Businesses, motor traders, authorities worry over soaring COE cost

Sky-high certificate of entitlement (COE) prices for commercial vehicles have become a worry for businesses, motor traders and the authorities. -- ST FILE PHOTO: LIM YAOHUI  
Sky-high certificate of entitlement (COE) prices for commercial vehicles have become a worry for businesses, motor traders and the authorities. -- ST FILE PHOTO: LIM YAOHUI  

LTA looking at putting light and heavy vehicles in separate categories

Sky-high certificate of entitlement (COE) prices for commercial vehicles have become a worry for businesses, motor traders and the authorities.

Premiums for vans, trucks and buses have been setting record after record in recent months.

Now at $76,001, it has more than doubled its price since 2011 - chalking the biggest rise among all COE categories in the two years.

The motor industry attributes the climb to three factors.

First, there has been a construction boom that is driving demand for heavy vehicles such as concrete carriers and dump trucks.

According to Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, heavy vehicles now make up more than 50 per cent of commercial vehicle sales - up from the usual 20 per cent.

Second, motor dealers are clearing existing stock ahead of a new emission standard that kicks in on Jan 1. Third, speculators may be hoarding COEs in the hope of turning a profit by reselling them to motor dealers stuck with stock as the new year draws nearer.

Said Mr Lim: "If there is speculation, the Government should step in quickly to address the situation. Or consider a three- to six-month extension to the emission deadline. This should quell all speculative activities."

The Land Transport Authority (LTA) said it is hard to detect speculative activities. But it added that there are deterrents in place, such as a shorter three-month validity period for commercial COEs, half that of car certificates.

Still, an LTA spokesman said it is looking at ways to improve the system, including putting light and heavy commercial vehicles in separate categories. Buyers of the latter are better able to tolerate high COE prices since heavy vehicles are far costlier.

Transport Minister Lui Tuck Yew told Parliament in March that the Government "will study carefully" if buyers of "light goods vehicles should pay the same COE premium as heavy and very heavy goods vehicles".

Small and medium-sized businesses hope something will be done soon. Association of Small and Medium Enterprises president Chan Chong Beng said that the issue of high vehicle costs has overtaken labour shortage as the top concern raised by members. "For many small businesses, a vehicle is a must... And because of the new emission standard, prices will continue to rise next year, and that's very, very scary."

Vehicle cost will account for a bigger cost component for businesses, Mr Chan added. "Many, like hawkers, will find it hard to pass it on to consumers."

He said having separate COE categories for light and heavy vehicles would be "a good solution".

Ms Ivy Tao, 54, who runs a fleet of buses ferrying workers, said she has no choice but to delay replacing her older vehicles. "COEs are high, fuel prices are high. We don't feel secure any more."

LTA said businesses can consider extending their expiring COEs - by paying a prevailing quota premium - by five years, which they can do twice now since a restriction was lifted in February.

Previously, these COEs could either be extended by five or 10 years. Owners who chose the former had to scrap their vehicles at the end of their extension. Since the policy change, LTA said about 96 per cent of commercial COE renewals have been for five years, up from 57.

christan@sph.com.sg