We thank Mr Chiok Beng Piow for his views on the certificate of entitlement (COE) prices for Category D vehicles (Time to put brakes on runaway motorbike COE prices, Aug 23).

COE prices are determined primarily by demand and supply.

From July 2020 to July 2021, the accumulated COE quotas from the earlier suspension of COE bidding were returned into the monthly pool, thus increasing supply in these months.

Despite the higher-than-usual number of Category D COEs, we observed a high utilisation of temporary COEs by both large and small dealers. For temporary COEs expiring by the end of the month, more than 90 per cent have already been used to register motorcycles as of Aug 1. This suggests a high demand for motorcycles.

For the August to October 2021 period, the COE quota supply is 28 per cent lower than the preceding May to July period, as the return of earlier accumulated COEs has been concluded. The drop in supply could have contributed to Category D COE prices trending upwards.

The pay-as-you-bid system which Mr Chiok suggested is not used today for any of the COE categories, including for cars. The clearing price for all COE categories is the price of the highest unsuccessful bid plus $1.

We note the concerns regarding the increase in COE prices for motorcycles.

As this is the first month that the COE quota supply has gone back to being based primarily on the number of deregistrations in the previous quarter since the bidding exercise resumed after the circuit breaker, we will continue to monitor the situation closely and take action if warranted.

Ong Hui Guan

Deputy Group Director,

Policy and Planning

Land Transport Authority