COE premiums mostly higher, driven by wider 3-week gap between tenders, stronger sales
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Car buyers on the sidelines have been wooed back to showrooms following a COE price correction last month.
PHOTO: ST FILE
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SINGAPORE - Certificate of entitlement (COE) premiums ended mostly higher at the latest tender on Wednesday as a price correction in the previous round sent consumers back to showrooms.
A longer three-week gap between the previous tender
The COE premium for smaller, less powerful cars closed at $98,001 – 6.5 per cent higher than previously – while that for bigger, more powerful cars finished 6.8 per cent higher at $120,702. The latter is now close to its all-time high of $120,889 posted in April.
The premium for the Open category COE, which can be used for any vehicle type except motorcycles but ends up almost exclusively for bigger, more powerful cars, closed 3.3 per cent lower at $120,889. It was the only one which recorded a drop in this round.
The commercial vehicle COE premium ended 5.5 per cent higher at $81,801, while that for motorcycles continued its rebound to finish 3.8 per cent higher at $11,001.
Car dealers said retail sales were strong over the last three weeks after a one-off increase in the COE supply
This usually translates to more bids because sellers have more time to clinch orders.
Mr Nicholas Wong, general manager of Honda agent Kah Motor, pointed out that corporate buyers are still a significant driver of car COE prices. These are private-hire firms, car rental companies and company cars, which can also be used for private hire.
“If you look at these three groups, they account for almost 40 per cent of new car registrations,” he said. “That’s a significant percentage because in the car market, if you have 10-20 per cent market share, you are already a big price influence.”
Mr Wong added that “as long as these commercial interests are not taken out of the bidding process”, prices are unlikely to fall substantially.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said the latest results are not surprising as the one-off supply increase in COE quota was “negligible because the bases are small”.
“We’re talking an addition of no more than 200 pieces per month, which is not a lot,” he said. “After COE plunged two rounds ago, dealers launched sales promotions. On top of that, this round of bidding was three weeks after the last one.”
Individual bidders are also seen to be driving up the motorcycle COE premium. Industry watchers reckoned that these bidders were encouraged b y the price plunge to $5,002 in May
Motorcycle COE bidders now have to place a deposit of $1,500 per bid and COEs secured will have to be used to register a new bike within a month. Before this, the bid deposit was $800 and bidders had three months to register a bike.
Mr Rex Tan, president of the Singapore Motor Cycle Trade Association, said: “It’s the start of a new system. Give it a while to stabilise and settle down. It will take around three months to stabilise.”
He added that COEs secured at around $12,000 from February to April are unlikely to be used and will lapse. These expired COEs will go back into the system from August, he said.
