Christmas has come early for some car buyers with a substantial drop in certificate of entitlement (COE) prices.

The COE premium for cars up to 1,600cc and 130bhp fell by 4.7 per cent to $54,301 at the latest tender yesterday - the lowest in over three years. The COE price for cars above 1,600cc or 130bhp fell by 8.3 per cent to $55,001 - the lowest in over four years. The gap between the two is the smallest in recent years.

The premium for open COE, which can be used for any vehicle type but ends up mostly for bigger cars, fell by 4.2 per cent to $57,501, also the lowest in over four years.

The drop in prices was the second in a row since the previous tender two weeks ago, which saw premiums sliding by up to 3.7 per cent.

Motor traders had been expecting the dip. Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "The outlook for the entire market has been very weak."

He said prices will continue their downwards trend, as "there will be a bumper crop of COEs coming on the market". For the next quota period from February, he predicts there will be close to 600 more certificates for small cars, and 400 to 500 more for bigger cars. "COE (prices) will dip below $50,000," he said.

"When that happens, cars bought between 2011 and 2013 will start to be scrapped - and there will be even more COEs available."

He said he is already seeing some of these cars being deregistered as vehicles bought with $80,000- $90,000 COEs become commercially unviable when premiums are below $60,000 - and heading lower.

Meanwhile, the commercial vehicle COE price fell by 4.4 per cent to close at $46,001. The motorbike premium was the only exception - it rose by 1.5 per cent to close at an eight-month high of $6,600.

Christopher Tan