SINGAPORE - Certificate of entitlement (COE) prices ended mostly higher at the latest tender on Wednesday (Aug 18) as the economy reopened after the latest Covid-19 pandemic restrictions, with the highly speculated motorcycle premium reaching an all-time high.
The COE price for cars up to 1,600cc and 130bhp finished at $45,689, 1.1 per cent higher than two weeks ago. The premium for cars above 1,600cc or 130bhp climbed 8.9 per cent higher to close at a four-month high of $61,001.
The price for the Open COE, which can be used for any vehicle type except motorcycles but which ends up almost exclusively for bigger cars, also rose by 8.9 per cent to end at $64,901 - its highest since July 2015.
The motorcycle category, which has long been prone to speculative bidding by a handful of major players looking to hoard certificates, broke the last bidding's record $8,899 to close close 6.8 per cent higher at $9,500.
Meanwhile, commercial vehicle COE bucked the trend by ending at $40,010 - or 6 per cent lower - despite a significant shrinkage in supply.
The surge in COE price for bigger cars vis-a-vis the incremental rise in premiums for bread-and-butter cars indicates a weakness in the mainstream market, which accounts for the bulk of COEs.
Observers said buyers of bigger cars are less price-sensitive, while sellers have fatter margins to bid for COEs with.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said buyers in general are still cautious because of economic uncertainties brought about by the pandemic.
But he noted that buyers of bigger cars "have deeper pockets".
"Those who can afford it have many new models to choose from," Mr Neo added, noting that most of the recent new launches are bigger and more luxurious models from brands like Lexus, Mercedes-Benz and BMW.
The Straits Times understands Hyundai has, for instance, sold out its initial batch of 50 Ioniq 5 electric cars even before its official launch. Two variants are available, priced from $138,888.
Mr Neo said it was time to review the need for an Open category, since its COEs are usually secured by "a few big players".
"Having an Open category is disadvantageous to smaller players," he noted.
The trade veteran said the drop in commercial vehicle COE price points to businesses unwilling to pay beyond a certain price point. Instead, many are turning to buying petrol-driven models - instead of diesel - which qualify for the Early Turnover Scheme (ETS).
Vehicles bought under the ETS do not require fresh COEs. Instead, they are accorded a discounted rate on the prevailing quota premium - a moving average of past premiums.
Many petrol-powered light commercial vehicles also qualify for tax rebates.
"This is why you see a price drop (for commercial vehicle COEs), despite a much smaller supply," Mr Neo said.
