Cat A COE price falls 10% to $89,889; premiums down in most other categories

SINGAPORE - Certificate of entitlement (COE) premiums dropped across all categories except for commercial vehicles on Nov 20, with the price of a certificate for smaller cars tumbling by $10,000 to reach $89,889.

This is a 10 per cent drop and the third consecutive tender exercise where the price of a Category A COE has fallen. It is also the biggest drop for the category – meant for smaller and less powerful cars and electric vehicles (EVs) – since the first tender exercise of 2024 in January, when the price of a Category A certificate fell by $19,990.

The premium for a Category B COE, used to register larger and more powerful cars and EVs, dipped 2.7 per cent to $105,081, down from $108,001 previously.

But the latest car COE premiums are still above the levels seen in 2021, which had some of the lowest levels in recent years after tender exercises resumed following the elevated safe distancing measures during the Covid-19 pandemic.

At that time, a Category A COE cost between $40,609 and $58,000, while a Category B certificate was between $49,001 and $82,801.

The price of an Open category (Category E) COE ended at $107,501 – 1.4 per cent lower than the $109,000

recorded two weeks ago

. These certificates can be used to register any vehicle type other than motorcycles, but are almost always used for bigger and more powerful cars.

The price of a motorcycle (Category D) COE declined by 4.6 per cent to $8,669, from $9,089 at the previous tender.

The commercial vehicle (Category C) COE premium bucked the trend, rising 1 per cent to $69,000, up from $68,340 two weeks ago.

A COE is needed to register a vehicle for use in Singapore.

Motor dealers said business has been slow over the past few weeks, despite brands such as Audi, BMW, Mercedes-Benz and Hyundai holding roadshows and dangling offers to drum up sales.

This is reflected in the lower number of bids for the car category COEs submitted in the latest tender exercise compared with the previous round – 2,194 bids, down from 2,377.

Some dealers attributed the slowdown in sales to consumers responding to the Government’s recent announcement on injecting additional COEs over the next few years, and the year-end holiday period when more are travelling.

In October, the Land Transport Authority said it would inject up to 20,000 COEs over the next few years because travel patterns have evolved. The injection is on top of the expected increase in COE supply, as more vehicles will be scrapped in the coming years and their COEs will go into the upcoming COE supply.

There was a rush of 139 new bids for Category A COEs observed in the last five minutes of the latest exercise.

Mr Nicholas Wong, chief executive of Honda agent Kah Motor, said some of these could have come from car-leasing companies that saw an opportunity to secure cheaper COEs.

He said dealers that have to deliver cars sold to customers would typically put in their bids earlier in the exercise rather than wait until the last minute.

There were signs that dealers did not expect such a big drop in the Category A COE price.

One indication was the dealers’ “COE rebate level” – this refers to the price a buyer will pay for a COE, which is bundled into the overall car price.

If the premium for the secured COE falls below this mark, the customer gets to pocket the difference.

While many dealers set their rebate level for deals closed over the last two weeks above the $89,889 price set at the latest tender, brands such as Aion, BYD, Kia, Mazda and Toyota had offers with rebate levels that were higher.

After the latest tender results, motor traders expect the Category A COE premium to rebound – at least slightly.

They are hoping that customers will be tempted back to their showrooms with the lower COE premiums, although some acknowledged that consumers may hold back in anticipation of premiums falling even further.

Lower car prices are expected after the latest tender results. In order to close sales, some dealers expect to lower prices by as much as the fall in COE premium, or even more than that.

But Mr Ron Lim, head of sales and marketing at Nissan distributor Tan Chong Motor, cautioned: “Everyone can drop their prices. But it is whether they can secure the COEs that counts. So customers have to take note.”