Certificate of entitlement (COE) premiums closed mostly lower yesterday, in this month's second round of bidding.
The largest drop was for cars up to 1,600cc and 130bhp, with COE prices falling 11.3 per cent from $28,199 to $25,000. The price for the category last hit $25,000 - its lowest since 2010 - in August.
The next largest fall was for commercial vehicles, where the COE price dropped 6.8 per cent, from $29,501 to $27,509.
The COE premium for cars above 1,600cc or 130bhp closed at $31,101, down from $32,302 previously.
For the open category COE, which can be used for any vehicle type except motorcycles, but is mostly used for bigger cars, the price closed at $30,959. This was a 3.3 per cent drop from $32,000 in the last round of bidding .
Only the COE price for motorcycles closed higher at $2,989, from $2,509 previously, reversing the downward trend in recent months.
Observers point to a number of factors behind the downward trend for car COEs.
"The economic outlook is poor and interest rates are going up," said Mr Neo Nam Heng, chairman of diversified motor group Prime, adding that these factors have dampened the demand for cars.
The higher quota of COEs for smaller cars compared with the previous quarter has also helped drive the price for the category down, said Mr Nicholas Wong, general manager of Honda agent Kah Motor. Also playing an "important role" in dampening demand is the new vehicular emissions scheme introduced in July, said Mr Neo.
The Straits Times reported in September that only about 15 per cent of new cars registered qualified for rebates under the new scheme, which hands out tax rebates or surcharges based on a vehicle's emissions. "Popular cars that got a $10,000 rebate under the previous scheme now have a $10,000 surcharge," said Mr Neo.