COE prices for cars fall by more than 20% in first tender exercise of 2024
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COE premiums for smaller cars fell by 23.5 per cent to $65,010 from $85,000 two weeks ago.
ST PHOTO: GIN TAY
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SINGAPORE – Certificate of entitlement (COE) premiums for the two car categories fell by more than 20 per cent at the first tender exercise of 2024 that closed on the afternoon of Jan 4.
The premium for Category A, which is meant for less powerful cars and electric vehicles (EVs), posted the bigger drop. At $65,010, it is 23.5 per cent lower than the $85,000 posted two weeks ago. This puts it close to the levels seen in the first two months of 2022, when the premium was between $57,599 and $63,000.
Category B COEs, which are for more powerful cars and EVs, dropped by 22.7 per cent to $85,010 from $110,001 at the previous tender
The price of Open category COEs finished at $106,388, down 10.1 per cent from $118,388. This was slightly below the $107,889 posted at the first tender exercise in 2023, before premiums soared in subsequent exercises until the record high of $158,004 set in October.
Although such COEs can be used to register any type of vehicle other than motorcycles, they are almost always used for bigger and more powerful cars.
Open category COEs are also transferable and motor traders typically secure them ahead of big events like the Singapore Motorshow, opening on Jan 11, so that cars sold at the event can be registered without having to wait for the next tender exercise.
Such COEs have to be used within three months before they would be returned to the COE pool for bidding, and the $10,000 bid deposit would be forfeited.
Mr Anthony Teo, managing director of Vantage automotive, which distributes BYD, Ford and Peugeot, expects that with the latest results, dealers holding Open category COEs from October that cost $158,004 would allow them to lapse.
Motor dealers had expected car COE premiums to be lower at the latest round, though some, including representatives from Eurokars and Wearnes, said they were surprised by the magnitude of the drop.
Dealers had rushed to register cars before the new year to avoid the implementation of a new vehicle testing requirement and a reduction in tax rebates based on the vehicle’s emission levels
On Jan 4, hours before the tender closed, the sales director of a premium brand dealership said he was in no hurry to obtain COEs as his company has already cleared the stock of cars affected by the changes.
Car showrooms have also been quiet for most of December as many people were travelling, which meant fewer orders for cars and weaker demand for COEs, dealers said.
Looking forward, the number of COEs available from February to April is expected to be announced before the end of January. The Government had earlier said that the supply of COEs will continue to increase in 2024 until the projected peak years of 2026 and 2027.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said: “The market is still waiting to find out just how many COEs will be available from February to April. If the supply is going to be sizeable, then today’s results may not be the lowest that we will see.”
While having more COEs should help keep premiums down, dealers were reluctant to say that COE prices are bound to soften in the coming months with increased supply.
The number of COEs available in the upcoming three-month period is determined mainly by the average number of COEs that expired when cars were scrapped in the previous 12 months.
Since May 2023, the Land Transport Authority (LTA) has been reallocating COEs due to expire in the future to boost supply by varying degrees. In the current three-month period ending January 2024, 22.7 per cent of the Category B COEs available are reallocations.
Dealers like Mr Jason Lim, managing director of Eurokars Auto BMW, said the reallocations make it difficult for traders to predict the COE supply in the coming months.
Ms Corinne Chua, managing director of Volvo at Wearnes Automotive, noted that COE premiums tend to bounce back after a significant drop. In November’s second tender, the Category B COE premium rose $9,991 to end at $135,002 after falling by $32,993 earlier.
“It won’t be surprising if the Category B COE premium goes back to $110,000 at the next round,” she said.
Mr Ron Lim, head of sales and marketing at Nissan agent Tan Chong Motor, said any likelihood of a temporary rebound in COE premiums can be mitigated if the LTA can announce the quota earlier, “hopefully before the motor show”. He believes that this would help buyers make more informed decisions and remove the uncertainty in the market.
Meanwhile, commercial vehicle COE premiums fell by 2.6 per cent to end at $67,599, from $69,423.
At $9,114, the COE premium for motorcycles was the only category that registered an increase, rising by 1.2 per cent from $9,002.
