Despite reports of a huge backlog of orders garnered from last month's Singapore Motorshow, certificate of entitlement (COE) prices for cars took another plunge in the latest tender yesterday.
The COE for cars up to 1,600cc and 130bhp ended 9.1 per cent lower at $46,651. The COE for cars above 1,600cc or 130bhp fell by 22.9 per cent - one of the single biggest falls ever - to close at a six-year low of $38,610.
The open COE, which can be used for any vehicle type but ends up mostly for bigger cars, dropped by 13.7 per cent to finish at $44,001, its lowest in more than five years.
The commercial vehicle COE dipped by 3.2 per cent to end at $45,036. This means the COE for vans and trucks is now costlier than that for limousines. It also means small businesses can now, for the first time, bid for an open COE to register a new lorry.
Motorcycle premiums ended 0.1 per cent lower at $6,503.
The results - especially the premium for bigger cars - took many motor traders by surprise.
"It's a big drop. I think it has partly to do with consumer confidence. The stock market is also down," said Singapore Vehicle Traders Association president Michael Lim.
He expects a sharp reduction in car prices following the latest COE results, and that premiums "will surely go up after Chinese New Year... people will rush in to buy cars".
Mr Neo Nam Heng, chairman of diversified motor group Prime, was not so sure. "If there's a rebound, it'll not be strong, and it'll be temporary," he said.
Mr Neo, who has one of the most bearish views in the trade, said: "The whole market, especially Category B (bigger cars), is very, very quiet.
"The Japanese yen is high, so the cost of cars is up, margins are thinner. Also, many of the deals done during the motor show were 'lelong' (at bargain prices), so where is the margin to bid high?"
He said that, "at the end of the day, COE is about supply and demand".
The supply is now up as the number of COEs available in the current quota period is 21 per cent higher than in the previous period.
"But demand is down because of the weak economic outlook; people are holding back," said Mr Neo.
The veteran motor dealer said people will continue to hold back for the rest of the year. With the COE supply slated to continue growing until late next year, prices should continue to trend south till then.
Meanwhile, motor dealers are poised to cut prices, although not every reduction will be by the same quantum of the COE drop.
"It would not be realistic," said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor.
SEE TOP OF THE NEWS