Making sense of the COE spike

Last week's 18 per cent jump in the Open certificate of entitlement premium defies logic. But could it signal a return to irrationality?

Something is rotten in the state of Denmark. That line from Shakespeare's Hamlet could well apply to a $7,200 spike in the Open certificate of entitlement (COE) premium seen in the last tender, which in today's context, makes as much sense as a 6-litre V12 in a subcompact.

The last time the premium shot up by as much was in September 2013, when car COE categories were modified to include engine power output as a determinant. Car dealers rushing to clear existing stock before the new categorisation kicked in sent premiums soaring.

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A version of this article appeared in the print edition of The Straits Times on April 13, 2019, with the headline 'Making sense of the COE spike'. Print Edition | Subscribe