SINGAPORE - Certificate of entitlement (COE) prices fell across most categories at the end of the first bidding exercise of 2022 on Wednesday (Jan 5), bucking earlier predictions that premiums might continue to rise after shooting up at the end of last year.
The premium for larger cars above 1,600cc or 130bhp fell by the largest margin, closing at $77,700, a 4 per cent decrease from $80,989 at the previous round of bidding.
After hitting a six-year high at the end of last year, the premium for smaller cars up to 1,600cc and 130bhp also ended lower on Wednesday, closing at $57,599.
This is 2 per cent lower compared with $58,801 on Dec 22 last year.
The premium for Open COE, which can be used for any vehicle type but ends up mostly for bigger cars, also fell to $82,501, down from $83,889 at the previous bidding exercise.
The COE price for goods vehicles and buses also finished 4 per cent lower at $42,200, compared with $44,000 two weeks ago.
The price for motorcycle COEs was the only one that went up on Wednesday, but only slightly. Premiums in the category ended at $9,689, $88 higher than $9,601 at the previous tender.
At Wednesday's tender, a total of 2,436 bids were received for a quota of 1,800 COEs available.
Motor traders partly attributed the fall in COE prices to caution, both from car dealers and car buyers, given that this was the first tender of the year.
“At the end of last year, everybody was rushing because some of the agents wanted to make up their sales numbers for 2021. For this round, everyone seems to be waiting to see how the market will move,” said Mr Raymond Tang, honorary secretary of the Singapore Vehicle Traders Association.
For Mr Nicholas Wong, general manager of Honda agent Kah Motor, the fall in COE prices is a welcome relief, especially after premiums for smaller cars had risen in at least five consecutive bidding exercises before Wednesday.
The previous increases had put a dampener on buying demand, said Mr Ron Lim, head of sales and marketing at Nissan agent Tan Chong Motor.
Mr Wong said slow business could be one reason for the fall in premiums. Showrooms have been mostly empty, and with the new year and schools reopening, customers are not coming in to the dealerships, he said.
With the drop in COE prices, there is now a window of opportunity for prospective buyers to enter the market, he added.
Mr Lim said some customers are starting to come to terms with the high premiums.
“I don’t think COE prices will fall much from here, but at the same time, they shouldn’t go up too high because the market has already given an indication that buyers don’t want to see COE prices go up too much,” he said.
Motor dealers are keeping a close eye on how many COEs will be made available for the bidding exercises between February and April this year.
The quota for those three months will be announced some time this month.
Said Mr Tang: “I don’t think the allocation will change much but a slight movement could see COE prices jump.”
