Car dealers expect certificate of entitlement (COE) premiums to head further south in the near future, which could push down prices of vehicles even more.
Many have already reacted to the latest COE tender on Wednesday, which saw premiums drop by up to 9.3 per cent.
The Nissan Sylphy now costs $102,800, down from $105,800, for example. Tan Chong Motor has also slashed the price of its larger cars by $7,000. Volkswagen cut the price of its cars above 1,600cc by up to $5,500.
Some dealers have also lowered their rebate levels, a sign that they expect COE prices to go down further.
Honda agent Kah Motor revised its rebate for smaller cars to $49,000, down from $52,000 two weeks ago. Meanwhile, Toyota agent Borneo Motors cut its rebate for bigger cars by $10,000.
A buyer will get back the difference if the COE premium comes in below the rebate level.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, believes demand for cars could also decrease as the full impact of government loan curbs kick in.
"The expectation is that COE premiums will soften, so no dealer will bid aggressively in case it affects his margins."
Two months ago, the maximum loan for a car was cut from 100 per cent of the purchase price to 50 per cent or 60 per cent, while the tenure was reduced from 10 years to five.
Last week, the Government also closed off loopholes by making sure that the curbs apply not just to bank loans, but also those offered by credit companies and moneylenders.
The impact continues to be felt. The premium for smaller cars up to 1,600cc dropped for the third consecutive time on Wednesday, ending 5 per cent lower at $61,029. COE prices for bigger cars above 1,600cc dropped by 9.3 per cent to end at $67,010.
Industry observers expect premiums to stabilise only after a few more bidding exercises. A sales manager, who declined to be named, at one of the dealerships here also pointed out that many customers who visit the showroom are not committing to a purchase, preferring instead to wait.
Mr Andy Koh, 42, who works in the finance industry, has been looking to buy a new car to replace his eight-year-old BMW 3-series. He is now waiting to see if prices fall further. "There's a lot of uncertainty over COE prices, but people are hoping they will stabilise downwards."
Still, Mr Lim doubts premiums will drop below $50,000 as the supply of COEs is still at an all-time low.