Experts concerned as motorbike COEs rise to record high

The motorcycle population has grown by 6 per cent in the last 10 years, compared to cars, with a 48 per cent jump. Some motorcycle deregistrations go to the Open category and are snapped up by car buyers.
The motorcycle population has grown by 6 per cent in the last 10 years, compared to cars, with a 48 per cent jump. Some motorcycle deregistrations go to the Open category and are snapped up by car buyers.ST PHOTO: ALPHONSUS CHERN

System could be contributing to demand, putting motorcycle buyers at disadvantage

Industry players and experts say the current Certificate of Entitlement (COE) system as it applies to motorcycles is a cause for concern.

Their comments come in the wake of COE premiums for motorcyles ending at a record high of $6,889 on Wednesday, up from $6,600 three weeks ago.

Mr Tony Yeo, president of the Singapore Motor Cycle Trade Association, said: "If nothing is done, the price will easily shoot up to $10,000 within the next 12 months."

Premiums for motorcycles have more than doubled since 2011, when they ranged from about $1,500 to $2,600, according to Land Transport Authority figures.

Premiums climbed to above $3,000 in February 2014 and over $4,000 a month later.

Industry players noted that a source of increased demand for motorcyles and, in turn, higher premiums, was would-be small car buyers who cannot afford cars, owing to new loan curbs and high COEs for cars.

The latter ranged from around $54,000 to over $68,000 in the last year for Category A cars.

Mr Yeo said a major flaw in the system which puts motorcycle buyers at a disadvantage is that a percentage of de-registrations from each vehicle group, including motorcycle de-registrations, goes towards the Open category.

While COEs from the Open category can be used by all would-be vehicle buyers, they are mainly used by luxury car buyers. This ends up making them too costly for motorcycle buyers.

"We are effectively seeing a 10 per cent migration of motorcycle numbers to cars in the Open category," said Mr Wilson Phoon, director of motorcycle dealer A.S. Phoon.

This has resulted in a slowing motorcycle population overall.

In 2014, there were 616,609 cars on the roads, a 48 per cent jump from 10 years before that. But the motorcycle population grew only 6 per cent over the same period, to 144,404.

Mr Yeo said that the LTA should consider adjusting the current system and stop taking a percentage of available COEs from motorcycle and commercial vehicles for the Open category.

Dealers noted that motorcycle buyers are now in a situation where they are paying more for the COE than for the machine.

Motorcycle models under 200cc generally make up about 70 per cent of the total motorcycle population here, and these cost an average of $3,000 to $4,000.

Mr Jackson Oh, manager at Wing Yap Motor, said low-income individuals, especially those who use their bikes for delivery work, are the most affected.

"The majority of them are relying on this as an affordable mode of transport," he said.

Transport expert and SIM University adjunct associate professor Park Byung Joon said the rising COE premium for motorcycles could eventually hurt small businesses, including food delivery services.

"If the motorcycle COE becomes out of reach and is hurting small businesses and lower-income buyers, we could consider introducing a new class of COE for people who are using their bike for commercial purposes," he said.

"But it is not easy to change the system, and we have to carefully consider how we should define and enforce it."

Mr Tee Kok Wee, 46, an assistant service manager who bought a second-hand motorcycle recently, said he would not buy a new bike with the current COE price.

"It's almost twice the price of the vehicle and that's unacceptable," he said.

A version of this article appeared in the print edition of The Straits Times on January 09, 2016, with the headline 'Experts concerned as motorbike COEs rise to record high'. Print Edition | Subscribe