Pent-up demand fuels COE prices

COE premiums are at their highest level this year, driven up by car-loan changes and bidding from private-hire players.
COE premiums are at their highest level this year, driven up by car-loan changes and bidding from private-hire players.PHOTO: ST FILE

Certificate of entitlement (COE) premiums ended higher again in the latest tender yesterday as the easing of car-financing rules continued to fan pent-up demand.

The increases were, however, not as sharp as the double-digit rises posted in the previous round immediately after the Monetary Authority of Singapore (MAS) sprung its surprise move to relax car-loan curbs late last month.

COE premium for cars up to 1,600cc and 130bhp rose by 2.8 per cent to end at $55,200. COE price for cars above 1,600cc or 130bhp crept up by 1.8 per cent to hit $57,010. Premium for Open COE, which can be used for any vehicle type but ends up mostly for bigger cars, climbed 4.2 per cent to finish at $57,390.

All these premiums are now at their highest level this year, driven up by the car-loan changes as well as aggressive bidding from private-hire players such as Uber.

How much these players contributed to the latest increases is not known. The Land Transport Authority recently blocked free access to bidders' information, which was available before Uber and company began growing their fleets aggressively.

Mr Nicholas Wong, general manager of Honda agent Kah Motor, said: "There were 200 to 300 bids submitted in the last minutes. It might have been private-hire companies, but we have no way of verifying now."

Mr Wong said premiums are likely to remain high as motor firms "collected a lot of orders" after the MAS announcement. "It'll take some time for us to clear these orders." Prices will remain high if they are not cleared.

Mr Wong added that if the next quota, from August to October, is not sizeably bigger, premiums may stay high.

Meanwhile, the commercial vehicle COE price rose by 3.4 per cent to end at a three-month high of $48,002. Premium for motorcycle COE, long cornered by speculators and big players, ended $1 higher at $6,303. The premium has been alternating between $6,302 and $6,303 in the last four rounds. Christopher Tan

A version of this article appeared in the print edition of The Straits Times on June 23, 2016, with the headline 'Pent-up demand fuels COE prices'. Print Edition | Subscribe