TEST: The best time to buy a car

One man’s view on the direction of car COE prices

Is it a good time to buy a car now? If I got a dollar for each time I am asked that question (or variations of it), I would be happily retired, sitting by the beach and staring into the horizon with a cold beer in hand.

Not behind the keyboard, gazing at the monitor, with cold sweat forming on my brow as yet another deadline looms.

But since I am here, and since this is the start of another new year – with changes to the COE system that could have interesting outcomes – let me address that question. With more than one answer.

Generally speaking, now is still not an ideal time to buy a new car. COE prices are expected to remain high in the first half of the year, even if Category A premiums are showing signs of softening.

But if you are in dire need of a car – say, your current car is expiring in two weeks’ time or your wife is expecting twins and threatens divorce if you don’t get a car, pronto – go buy a used car.

Preferably, get a cheap old car. Better still, a cheap old car bought directly from its owner, not a dealer. This way, you get a car with minimal depreciation, which should tide you over till COE prices return to saner levels.

This should happen between next year and 2018. This is because COE supply will start to expand from the second half of this year, and peak around 2016.

Even if the Government decides to “keep” some certificates from these bountiful years for the next dry spell (2019-2023) – say, 20 per cent – the supplies next year and in 2016 and 2017 should still be fairly sizeable.

It has hinted strongly that it will do this to flatten a supply pattern that see-saws more than Christian Bale’s waistline. But it has not indicated when and by how much. Let’s hope good sense prevails and the “savings” are staggered and measured.

Now, the “good years” recommendation above applies to folks who are hoping for COE prices to fall by 40 to 60 per cent.

Those among you who are happy with merely a 10 or 20 per cent drop in prices won’t have to wait as long. Especially if you are shopping for a Category A car.

A new engine power cap for Cat A cars that kicks in from next month will move several premium cars out of the category. This should relieve bidding pressure and bring premiums down. Simple demand and supply.

But already, the market has begun adjusting to this change. A number of European brands have introduced diesel models – which typically produce less horsepower than petrol equivalents – to maintain their presence in Category A.

However, these are not expected to be hugely popular.

So, Cat A premiums should dip from the second half – unless BMW and Mercedes-Benz return with models that produce no more than 130bhp in the next few weeks (which is unlikely in the near term).

The operative words are “dip” and “second half”, because COE supply will continue to be constricted in the first half, with the probability of growth only in the second half.

No such luck if you are eyeing bigger cars. With the power cap, several cars will move from Cat A to B. This will inevitably put upward pressure on premiums here.

More so when a slew of sizzling new models are expected from the likes of Mercedes, BMW and Porsche this year.

So, if you are bent on having a bigger car, you should wait till next year, at least.

Of course, this does not apply if you belong to a group of consumers who are flush with cash the way teenagers are flush with tweets.

If that is the case, “what” to buy is probably more relevant than “when” to buy. And the choices are bewildering these days, with luxury and premium marques rolling out so many models each year that even their own communications managers are befuddled by specifications.

For mere mortals who work within more modest budgets, making a series of untimely automotive purchases could eventually translate to a $500,000 difference in the retirement fund.

Which, understandably, leads many to pose the mundane question that started this article. If the answers are still unclear, here are some bite-size takeaways for you (bejewelled company excluded):

If you are looking to buy a big car, do so between next year and 2017.

If you are looking to buy a small car (defined as no bigger than 1,600cc and with engine power no more than 130bhp), you can start shopping from mid-year.

The best year to buy any car should be 2016.

If you have to get a car urgently, pick up a used one – an older, cheaper model with a couple of years left on its COE.

Now cut this out and paste it on your fridge door, or copy it onto your desktop. Because the next time you ask, I will be charging. christan@sph.com.sg