COE premiums down for all categories except smaller and less-powerful cars

SINGAPORE – Certificate of entitlement (COE) premiums ended lower for all categories except smaller and less-powerful cars at the latest tender that closed on Dec 6, with some motor traders attributing the weaker demand for COEs to more people travelling during the year-end holiday season.

The COE premium for Category A, for smaller and less-powerful cars, climbed to $88,020 – 3.6 per cent higher than the $85,001 recorded at

the last exercise

.

The price of Category B COEs, which are for larger and more powerful cars, ended at $130,100, down 3.9 per cent from $135,336.

Open category COEs, which can be used to register any type of vehicle other than motorcycles, were priced at $133,388, a dip of 1.2 per cent from $135,002.

Such COEs are typically used for larger cars and electric vehicles (EVs).

The commercial vehicle COE premium fell by 3.9 per cent to $71,001, from $73,889 a fortnight ago.

The price of motorcycle COEs was down 1.4 per cent to $9,858, from $10,001.

Some motor traders said their showrooms have been quiet the past two weekends, with customers possibly travelling at this time of the year.

Vincar owner Vincent Tan said he had expected the Category A premium to rebound by about $5,000, after it dropped by about $10,000 at the previous tender in November.

He called the $3,019 increase in this category “lucky” and attributed the relatively weaker rebound to the practice of selling cars with “non-guaranteed” COEs, which he said has become more prevalent recently.

Such sales contracts give dealers as many as six tender exercises to secure the needed COE to deliver the car.

This gives them time to wait for COE prices to be lower.

“$88,000 is still a high price to pay for a Category A COE, so those who can afford to wait will not rush to buy a car now,” Mr Tan added.

Mr Nicholas Wong, chief executive of Honda agent Kah Motor, said the dip in the Category B COE price was expected after the premium rebounded more than $25,000 at the previous tender. That price rally in November was likely driven by dealers who were anxious about not being able to secure the COEs they needed, he added.

Komoco Motors commercial director Ng Choon Wee noted that dealers who are still pushing to meet their year-end sales targets would have lowered their selling prices to the point where they are not able to afford to chase up premiums much further.

He added that there may not be much of a ready stock of cars in the market that can be registered within 2023.

Some dealers, Mr Ng said, are telling customers that stocks are arriving only in early 2024. The prices of such models would then be set to reflect the revised Vehicular Emissions Scheme that will apply from the new year.

Ms Corinne Chua, Wearnes Automotive’s managing director for Volvo Cars, said COE premiums could hover at current levels or end even lower at the second tender in December, given that there were fewer unsuccessful bids across the car categories at the latest exercise.

Motor dealers see the number of unsuccessful bids as an indication of the level of expected demand at the next round.

Mr Say Kwee Neng, an automotive consultant who was in the motor trade for more than 20 years, said the big swings in COE premiums in recent tender exercises reflect “the market finding an equilibrium while the traders are short of cars to deliver”.

“But I am genuinely surprised that the Category B COE remains above $130,000,” he added.