Certificate of entitlement (COE) prices fell across the board at the end of the latest bidding exercise yesterday, continuing a mostly downward trend from the previous tender.
The premium for commercial vehicles fell by the largest margin, about 9 per cent, after hitting a three-year peak two weeks ago.
The COE price in that category closed at $40,890, down from $45,001. Premiums for smaller cars up to 1,600cc and 130bhp also ended lower at $41,001, down from $42,000 on Feb 3.
The COE price for larger cars above 1,600cc or 130bhp also dipped, closing at $46,002 from $46,790 at the last tender.
The premium for the Open COE, which can be used for any vehicle type except motorcycles but ends up predominantly used for bigger cars, continued to slide. It closed at $47,506 from $49,778 at the last tender. The COE price for motorcycles also inched downwards to $7,500 from $7,506 previously.
Mr Raymond Tang, managing director of Yong Lee Seng Motor, said the industry had expected prices to fall given lower demand during Chinese New Year.
However, the margins were smaller than expected and with COE prices for passenger vehicles still strong, premiums could slowly drive upwards in future exercises.
Mr Neo Nam Heng, chairman of the diversified motor group Prime, said the fall in COE prices at the latest tender reflects weak sentiment as the market has started to soften despite recent cuts in COE quotas.
"Prices will stabilise and even if there is fluctuation, it will be small," he said. "When prices go up to a certain level, consumers will reject them."
With slightly over a month until a new emissions scheme kicks in on April 1 and almost all diesel models will attract a $10,000 tax surcharge, Mr Neo said the market for commercial vehicles will also continue to soften as the earlier rush to buy diesel vehicles and to clear existing stock has settled down.
"The COE price needs to come down to offset the $10,000 surcharge. Premiums over the next two bidding exercises will soften and go down after April," he added.