SINGAPORE – Certificate of entitlement (COE) premiums ended higher at the latest tender exercise on Jan 17, with the category for larger cars closing at $112,000 – a 31.7 per cent jump from a fortnight earlier.
This is the final tender exercise under the current three-month quota period and comes after the Singapore Motorshow, which ended on Jan 14. The event would have increased car sales and fuelled demand for COEs in this round.
The premium for Category B COEs, which are for bigger, more powerful models, rose by nearly $27,000 from $85,010 at the previous tender.
The COE premium for Category A – for smaller, less powerful models – finished at $81,589, or 25.5 per cent above the $65,010 recorded previously.
The price for the Open category COE closed at $109,004, which was 2.5 per cent higher than $106,388 before.
The COE premium for commercial vehicles inched up by 0.6 per cent from $67,599 to $68,001.
The motorcycle COE premium increased 2.1 per cent from $9,114 to $9,309.
The 4,464 bids entered for the two car COE categories far exceeded the allocated quota of 2,431 in this round.
In contrast, the previous January tender drew 2,034 bids vying for 1,557 COEs. Premiums fell at that exercise, which brought car prices down and more crowds to showrooms.
Various motor dealers said sales had been strong at the motor show, which featured 25 automotive brands.
Even brands like Peugeot and Chinese electric vehicle (EV) brand BYD, which were not at the event, said sales were very good over the past weekend. BYD said sales were three to four times higher than usual.
While traders generally expected car COE prices to rebound because of the increased sales, some expressed surprise at the significant surge in premiums.
This is in part because some car prices were reduced by between $13,000 and $20,000 in response to the $19,990 drop in Category A COE premium at the last tender exercise. It was reasoned that dealers would not bid high for COEs for these discounted cars as it would cut further into their margins.
Komoco Motors commercial director Ng Choon Wee had also expected a more modest rise in premiums, as dealers who do not have a ready stock of cars to deliver would have abstained from the latest tender.
The significant drop in COE prices at the end of December accelerated car sales beyond dealers’ predictions, resulting in some not having enough ready stock of cars in the new year.
In addition, some dealers whose sales contracts allow them up to six COE bids – or three months – to register and deliver the cars would have stayed away from the latest tender in anticipation of the premiums rebounding.
This means that it will take several more rounds before the orders collected in January can be fulfilled.
Furthermore, there will likely be more deals closed before the next COE tender, which is three weeks away – a week more than the usual gap.
Dealers will also be under pressure from customers who want to get their cars in time for Chinese New Year, which falls on Feb 10, three days after the next COE tender exercise closes.
Representatives from the six dealerships that The Straits Times spoke to expect COE premiums to remain level at the next bidding exercise, given the rollover of unsuccessful bids, Chinese New Year and the three-week gap.
However, they also said a lot will depend on the number of COEs that will be available for tender from February to April. This has yet to be announced by the Land Transport Authority.
