Certificate of entitlement (COE) prices ended mostly lower in the latest tender yesterday, as buying sentiment remained subdued on the back of an increasingly uncertain economic outlook.
The premium for cars up to 1,600cc and 130bhp crept up by 1.1 per cent to finish at $56,001. The COE price for cars above 1,600cc or 130bhp fell by 3 per cent to close at $58,190. The premium for the Open COE, which can be used for any vehicle type, took the biggest tumble. It ended 4.1 per cent lower at $58,801. The commercial vehicle COE price dipped by 0.9 per cent to end at a 16-month low of $44,890.
The motorbike premium was 0.7 per cent higher at $6,201.
Singapore Vehicle Traders Association president Michael Lim said consumer sentiment is weak because of economic uncertainty. "Everywhere in the world, the economic outlook is not good," he said.
Traders said this is affecting bigger cars more because such purchases are more discretionary.
Mr Lim noted buyers have been downgrading to smaller models, causing the premium differential between smaller and bigger car COEs to narrow to merely $2,000. Usually, the gap is $10,000 or more.
But he added that premiums "will hold at around $50,000-plus" as the COE supply may not grow as much as expected. "I'm worried about the next quota period (November-January)," he said. "More people are renewing their COEs, so there may be fewer cars scrapped."
The COE supply is determined largely by the number of cars scrapped in the preceding three months.
Mr Neo Nam Heng, chairman of Prime motor group, expects deregistrations to increase, interest rates to creep up, and the Japanese yen to rise against the Singapore dollar.
"All these, plus the uncertain economic sentiment, will pull down COE prices," he said.
He attributed the narrower gap between the car premiums to fewer big cars qualifying for carbon rebates. The Carbon-based Emissions Vehicle Scheme was toughened up in July, leading to mostly smaller cars qualifying for rebates.
Dealers usually keep part of the rebate to bolster their COE bidding prowess, fuelling more aggressive bidding for small-car COEs.