SINGAPORE - Ms Ailyn Kwang, 26, is a week from acquiring her motorcycle licence, but the soaring certificate of entitlement (COE) premium is putting the brakes on her hopes of buying a motorbike.
The premium for the motorcycle category closed at a record $9,500 on Aug 18. Her estimate was about $4,000 to $5,000 when she started her lessons in February.
She noted that the current COE is higher than the Yamaha XSR 155 she is eyeing, which now costs about $6,000. "I'm not sure if I will buy one immediately and will reconsider if the COE cost stays high," the business development manager said.
The record motorcycle premium is proving a roadblock to aspiring motorcyclists and experienced riders.
In August 2011, a motorcycle COE was $1,999. It had risen to $4,310 in March last year, before the circuit breaker, and climbed to $7,702 in July when bidding reopened. Since then, the premium has trended up, and motorcyclists are worried that the trend may continue.
Mr Thomas Varghese, 49, a marine manager in a shipping company, said: "There are two types of people who ride - those who can't afford cars, and those who ride for the love of riding. The first group is going to be affected the most."
He bought a second-hand Ducati about four years ago, and believed that the seller paid $4,000 for the COE. In comparison, $9,500 is "exorbitant and not at all affordable for many", he added.
Mr Rahim Vadia, 26, said there is speculation that the rising premiums could be due to more people buying motorcycles at a very low upfront cost to take on food delivery jobs during the pandemic.
"Most bikers agree, and companies like Grab and foodpanda are willing to pay, since demand for food delivery has risen. There are places where you can get bikes at a very low initial cost, sometimes with no deposit.
"These buyers can then earn through delivering food and pay what they owe slowly," added Mr Vadia, who bought a second-hand KTM 200 Duke in January this year and is currently in between jobs.
He is glad that he bought his bike earlier. "When COE price is high, there is more demand for second-hand bikes. Resellers know this and they mark up the price. This is bad for the buyer since as soon as the COE cost drops, they will not be able to resell it at a comparable value," he said.
But Singapore Motor Cycle Trade Association president Rex Tan does not believe that the emergence of more food delivery riders could have driven up prices to such an extent. He noted that high motorcycle COE premiums had predated the pandemic.
In February 2018, it reached $8,451.
The latest spike - which is "unnaturally high" - could be due to a drop in the COE quota, he said, referring to the drop in average monthly motorcycle COEs by 27.6 per cent from 1,228 pieces for May to July to 889 from August to October.
He noted that there was a disproportionately large number of expired motorcycle COEs, or COEs bought by dealers that were not used to register a bike for six months, in 2018.
This pushed COE prices up to a very high level that has not come down since.
"It stood at about 12 per cent of the total, compared with 1 per cent for cars," he said. "This means that it was not really rider demand that was the problem. Why was it so high? I can't answer this question."
Industry players who requested anonymity told The Straits Times that the motorcycle category has long been prone to speculative bidding by a few major firms, which forfeit only $200 if the COE is not used.
By pushing COE prices up, these dealers are able to sell motorcycles - with COEs bought in previous months at a lower price - at a premium, while still allowing buyers to dodge the more recent premiums that are higher.
Then Transport Minister Ong Ye Kung said in a parliamentary reply in January that the bid deposit for motorcycle COE is set low, as many lower-income Singaporeans require a bike to go about their work. There is worry that raising the deposit could increase costs for dealers and prices for buyers.
For Mr Yap Jianjie, who owns a 2010 Harley-Davidson Fat Bob and a 2012 Ducati Diavel, the high COE prices translate to dread at having to renew the Ducati's COE by July next year.
He said he renewed the Harley-Davidson's COE one year early in 2019 for $3,200.
"I will wait till July next year but I won't get my hopes up," the 33-year-old petrochemical process technician said.
This article was edited for clarity.