Certificate of entitlement (COE) premiums closed higher across the board in the latest tender yesterday, with the prices in Category A going up by nearly 20 per cent.
Premiums for the category, which is for cars up to 1,600cc and 130bhp, jumped to $42,902, just two weeks after they declined to a seven-year low of $36,001 during the previous round of bidding on Sept 6.
The next highest increase was for commercial vehicles, whose premiums rose about 9 per cent to $46,890, up from $43,002 previously.
The increase in COE prices for smaller cars was to be expected, with bidding for the category returning to normal after the unusual decline in the last round, said Mr Neo Nam Heng, chairman of diversified motor group Prime.
That was affected by new Euro 6 emission standards kicking in for new cars in September, and inventories may have been low as car dealers cleared their old stock and waited for new cars to arrive.
But the fall in premiums sparked a rush by customers this time, accounting for the dramatic price jump, with an upward trend likely to continue until the end of the year, said Yong Lee Seng Motor managing director Raymond Tang.
COE prices could decrease next year as new stocks of Euro 6 vehicles become more readily available, he said.
However, this is unlikely to cause car prices to go down as built-in surcharges for a new vehicular emissions scheme (VES) may "balance out" any decrease in premiums.
The scheme, which will come into effect in January, aims to encourage motorists to buy less polluting vehicles by imposing higher surcharges on carbon dioxide emissions and four other pollutants.
Many cars that qualify for tax rebates under the current scheme will lose their rebates, and may attract surcharges under VES.
One reason for the increase in premiums for mostly diesel-run commercial vehicles is dealers clearing stock of older Euro 5 vehicles, said Mr Neo. Diesel vehicles sold here will have to meet Euro 6 standards from January.
Prices in the open category - available for any vehicle type but used mostly for bigger cars - also closed higher at $49,012, an increase of about 2.1 per cent from the previous tender.
Prices for cars above $1,600cc or 130bhp and motorcycles also saw slight increases, closing at $49, 189 and $5,501 respectively.