COE prices end lower except for small cars

Certificate of entitlement (COE) prices ended mostly lower at the latest tender yesterday, as a plunge in premiums in the previous exercise sent buyers of smaller cars back to showrooms.

The COE price for cars up to 1,600cc and 130bhp rose by 11.1 per cent to end at $30,009.

This figure is still lower than earlier recent bids, which saw prices exceeding $36,000. It was the only category that posted an increase.

The COE price for cars above 1,600cc or 130bhp fell by 6.7 per cent to end at $39,728.

The premium for Open COEs, which are for any vehicle type but are mostly used for bigger cars, posted the biggest fall of 10.6 per cent to hit a three-month low of $42,002.

Industry watchers said the wide disparity between the premiums for small and big cars - more than $15,500 after the last tender - could have prompted buyers to abandon bigger models for smaller ones.

Mr Nicholas Wong, general manager of Honda agent Kah Motor, said weaker demand from private-hire operators contributed to the lower COE price for bigger cars.

The ongoing trade war between China and the United States is also seen as dampening demand for new vehicles.

This was most apparent for commercial vehicles, for which the COE premium fell by 6.9 per cent to hit its lowest level since May 2011.

Yesterday's dip was the third consecutive fall for this category.

But Mr Ron Lim, head of sales and marketing at Nissan agent Tan Chong Motor, said: "It came as a surprise because our van models are still doing well.

"Perhaps demand for trucks could have slowed down due to slower economic activity."

The motorcycle premium fell by 3.5 per cent to reach a five-month low of $3,090. Mr Wong said it would have fallen further if not for "manipulation" by some dealers, and that this was because of an abundant supply of bike COEs.

"Every year, the number of COEs available is higher than the total number of registrations," he said, calling it a sign of speculative bidding.

That is when dealers bid to hoard COEs, and then leave them unused when buyers fail to soak up the certificates. Dealers can afford to do so because of the low deposits required for motorcycle COE bids.

The unused COEs are recycled back into the system in future exercises, but the practice results in artificially high premiums. Christopher Tan

A version of this article appeared in the print edition of The Straits Times on June 07, 2019, with the headline 'COE prices end lower except for small cars'. Print Edition | Subscribe