Certificate of entitlement (COE) prices ended lower across the board in the latest tender yesterday, continuing a dip seen in the previous tender two weeks ago.
The COE price for cars above 1,600cc or 130bhp took the biggest tumble to close 6.7 per cent lower at $36,001. The COE premium for cars up to 1,600cc and 130bhp finished 0.4 per cent lower at $31,783.
The premium for the Open COE, which can be used for any vehicle type except motorcycles but which ends up mostly for bigger cars, ended 5.2 per cent lower at $37,912.
The commercial vehicle COE price finished 3.8 per cent lower at $25,502, and the motorcycle premium ended 4.9 per cent lower at $4,089.
Market watchers do not expect large fluctuations in premiums for the rest of the year as a pickup in replacement demand is offset by uncertain economic conditions.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "The market is really slow. If not for demand from the private-hire companies, the industry would be in trouble."
Mr Neo added that the slowing economy is "still a concern".
He also noted that the strengthening Japanese yen continued to have an impact on profit margins of many leading players.
Mr Ron Lim, head of sales and marketing at Nissan agent Tan Chong Motor, said the relatively small drop in the COE premium for smaller cars had to do with the sharp shrinkage in COE supply in this segment.
Hence, while consumer sentiment was weaker across the board because of the gloomier economic outlook, it is more readily translated into lower premiums in Categories B and E (for bigger cars), where the "combined quota is absolutely much bigger" than Category A (smaller cars). "This trend could continue as long as Category A quota is smaller than the combined quota for B and E," Mr Lim said, noting that this would eventually lead to a "narrowing gap" between Category A and B premiums.