SINGAPORE - Certificate of entitlement (COE) premiums rose across all categories at the latest tender exercise that closed on Wednesday (June 22).
This was the first tender exercise since COE premiums broke the $100,000 mark in two categories on June 8.
The price for cars with engines bigger than 1,600cc or 130bhp and fully electric vehicles (EVs) with a power output of above 110 kilowatts went up by 5.3 per cent from $100,684 to $106,001.
In the Open category, which tends to be used to register larger cars, the premium ended at $104,400 - 3.7 per cent above the $100,697 registered previously.
The price for smaller cars and less powerful EVs also went up by 1.6 per cent from $73,801 to $74,989.
Commercial vehicle COE premiums edged up by $9 to end at $53,011.
The price of COEs for motorcycles went up by 3 per cent, from $10,000 to $10,302.
Some car dealers, both authorised dealers and parallel importers, said the number of unsuccessful bids registered in the two most recent tender exercises reflects how severely the supply of COEs is falling behind the demand for cars.
In the category for larger cars, there were 822 bids vying for 531 COEs in the latest tender, which meant 291 bidders failed to secure COEs. There was a similar number of failed bids in the June 8 exercise. And in the four exercises before that, the number of excess bids were between 128 and 186.
Bids for such COEs are entered only when there is a buyer waiting to register a car. Those who have failed in the earlier exercises will bid again in subsequent tenders for the dealers to put their cars on the road.
COE tender exercises run for three days. Normally, bids are only entered on the final day, often minutes before the closing.
In the latest tender exercise that closed on Wednesday, an observer noted that there were already 89 bids registered by 6pm on Tuesday in the large car category.
While these bids can be from individual car buyers who are looking to secure COEs privately, that is not a common practice. Instead, the observer suggested that it may be from the American EV brand Tesla.
Unlike most car brands that price their cars with COEs, Tesla does not do so. When the vehicle is ready for registration, the buyer authorises Tesla to bid on their behalf, up to an agreed level above the last COE price. This can vary between 5 per cent and 8 per cent, or even more, depending on the situation when the deal was done.
This allows Tesla to put in the maximum price that it is authorised to bid early on in the exercise and not have to repeatedly adjust upwards as the tender exercise develops, as other brands would do.
The supply of Teslas to Singapore seems to have taken a hit due to production shortages in recent months. From April to May, only 10 Teslas were registered. This is significantly below the average of 60 units a month seen in the first quarter of 2022.
If Tesla is the one putting in the bulk of advance bids, then the brand has likely received a sufficient shipment of cars and is getting ready for registration.
Other car dealers have also been holding more roadshows away from their showrooms to reach customers. The orders taken would drive the need for COEs.
Additionally, there are signs that LTA’s announcement to move lesser powered mass market EVs into the small car COE category in May could also be partially responsible for the higher COE premium for smaller cars.
In May, Chinese brand MG registered 100 units of its ZS EV SUV, which is one of the EVs to benefit from the change. The brand had registered just 32 units in total in the first four months of the year.
Mr Eddie Loo, president of the Singapore Vehicle Traders Association, said it is clear demand for COEs is outstripping supply.
He added: “At this rate, we may really have to accept the $100,000 COE premium as the new norm.”
Meanwhile, motorcycle COE premiums are on the rise again just months after the Land Transport Authority acted to “encourage prudent bidding behaviour” in March, when prices had hit a high of $11,400.
It halved the validity period to use the motorcycle COE after it is secured from six to three months and raised the bidding deposit from $200 to $800. These measures apply to COEs secured from the second exercise in March. Those from earlier exercises would still be valid for six months.
Mr Rex Tan, president of the Singapore Motor Cycle Trade Association, does not regard the high motorcycle COE premiums seen on Wednesday as a sign that the measures are losing effectiveness.
Instead, he said dealers may be putting in a last-ditch effort to keep premiums high. This is because the expensive COEs secured at the end of last year, at the cost of $9,601 with a six-month validity, and those from March, which are valued at $10,501 and are valid for three months, would all expire by this round.