Postponing of COE tender drives talk of car policy changes

Car showrooms could be packed this weekend as some observers believe Monday's Budget speech may carry announcements of changes to vehicle policy that are likely to push car prices higher.
Car showrooms could be packed this weekend as some observers believe Monday's Budget speech may carry announcements of changes to vehicle policy that are likely to push car prices higher.ST PHOTO: KUA CHEE SIONG

The Land Transport Authority announced yesterday that the next certificate of entitlement (COE) tender will be delayed for two days, triggering speculation that major changes affecting car buyers are afoot.

The LTA said bidding will begin next Wednesday and end on Friday, instead of the usual Monday to Wednesday exercise period.

Motor traders expect announcements to be made on Budget Day next Monday to have an impact on prices.

Mr Vincent Ng, a consultant with parallel importer Ideal Motoring, said the announcements "should be related to the (COE) quota".

"They might moderate supply to keep premiums at the $50,000 level," he told The Straits Times.

Car COE premiums dipped at the first tender of this month to around $48,000, and look poised to slide further on what is expected to be a sizeable quota.

Putting aside COEs for leaner years has been mooted before, but former transport minister Lui Tuck Yew said the Government had decided not to do that.

Other observers said a quota change was unlikely, given that a spate of COE revalidations - where car owners pay to extend the lifespan of their car's expiring COE - will in effect flatten the sharply cyclical COE supply curve over time.

A veteran dealer said: "There must be some structural changes coming. Otherwise, they won't need to postpone the bidding."

There is also talk that the Government will lower the annual vehicle population growth rate further. It is now 0.25 per cent, and the possibility of zero growth has been raised before by Senior Minister of State for Transport Josephine Teo.

The other widely expected change is to the Carbon Emissions-based Vehicle Scheme.

As first reported by ST on Jan 4, the Government is looking to introduce more criteria into the scheme, which dishes out tax rebates and surcharges according to how much carbon dioxide a car emits.

New pollutants being looked into include fine particulate matter, carbon monoxide and nitrogen oxides.

And with recently announced rules for private-hire cars, there is also talk that operators such as Uber and Grab may be barred from bidding directly for COEs.

They have been blamed for pushing COE prices up, after starting to grow their fleet of new cars two years ago.

Taxi companies are barred from bidding. Instead, they pay a prevailing quota premium for new cabs.

Lastly, some traders expect the power cap for Category A COE (cars up to 1,600cc and 130bhp) to be lowered to 120bhp.

Traders said buyers trying to beat the changes - which are likely to push prices higher - might cause a frenzied rush to showrooms this weekend.

A version of this article appeared in the print edition of The Straits Times on February 18, 2017, with the headline 'Postponing of COE tender drives talk of car policy changes'. Print Edition | Subscribe