Those shopping for affordable cars have hit a cost bump, with the certificate of entitlement (COE) price for smaller cars hitting a six-year high yesterday in the latest tender. The premium for cars up to 1,600cc and 130bhp ended at $57,010, up 3.7 per cent from the last tender on Nov 17.
This is the highest amount in that category since November 2015, when it was $59,200.
The premium for larger cars above 1,600cc or 130bhp is also up, at $80,401, compared with $79,601 in the previous tender, while that for goods vehicles and buses finished 3.4 per cent higher at $45,000. The motorcycle COE price rose to $9,401, from $9,381.
The premium for Open COE, which can be used for any vehicle type but ends up mostly for bigger cars, is the only one to fall, closing 1.2 per cent lower at $85,000.
A total of 2,569 bids were received for 1,791 COEs .
Motor traders told The Straits Times that the premium for smaller cars is likely to keep creeping upwards as the supply of COEs keeps shrinking.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "When the supply is so tight, prices move up despite the market sentiment being so weak... If not for the bad sentiment because of Covid-19, Cat A (for cars up to 1,600cc and 130bhp) would have crossed the $60,000 mark."
Mr Neo said premiums for larger cars and the Open category are likely to remain stagnant as there does not appear to be enough momentum to push prices higher.
Yong Lee Seng Motor managing director Raymond Tang said the sharp increase in COE prices shows there is still demand and he expects premiums to keep rising gradually over the next year or so.
He said premiums for larger cars and the Open category could reach $90,000. This is especially if the COE quota is slashed again for bidding between February and April 2022, or if buying strength bounces back. "Because the number of COEs allocated is so low... all it takes is for a vehicle model or car agent to do well and premiums will be going up," said Mr Tang.