Certificate of entitlement (COE) prices ended higher across the board at the latest tender yesterday - the first after a three-month suspension.
Bidding was put on ice from April to last month when non-essential businesses were closed to stem transmission of the coronavirus.
When bidding ended at 4pm yesterday, the COE price for cars up to 1,600cc and 130bhp closed at $33,520, 7.4 per cent higher than its previous close in March.
The COE price for cars above 1,600cc or 130bhp finished 19.6 per cent higher at $35,889.
The price for the Open COE - which can be used for any vehicle type except motorcycles but which ends up mostly for bigger cars - closed 7.7 per cent higher at $34,989.
The commercial vehicle COE price rose 11.4 per cent to end at $24,502.
Motor traders said the increases were fuelled by pent-up demand, which was partially cooled by a slight increase in COE supply.
Even though the number of bids received doubled, premiums rose by no more than 20 per cent, to return to where they were in January.
"The results were pretty much within expectation," said multi-franchise group Jardine Cycle & Carriage's managing director (direct motor interests), Mr Eric Chan.
Another reason for the relatively subdued increase was that cars were priced with thin margins.
Nissan agent Tan Chong Motor's sales and marketing head, Mr Ron Lim, said there seems to be "a sense of desperation" among dealers who were out to secure COEs "at all cost just to move their stock".
He noted that many cars were in fact priced $5,000 to $10,000 lower than they were in March.
"So definitely no margins to be made," he said, adding that storage cost and arrival of new shipments added pressure on dealers to clear existing stock.
The picture was starkly different for the motorcycle COE, though. The price soared by 71.6 per cent to end at $7,702 - the highest in over two years, and not far from the record of $8,451 in February 2018.
Dealers said the wild bids were in part due to motorcycle COEs being transferable, valid for six months and requiring a deposit of only $200.
Mr Nicholas Wong, general manager of Honda agent Kah Motor, said: "If you don't have a COE, you cannot even sell bikes. Six months down the road, if you can't find a buyer, you just let the COE lapse and forfeit $200."
Car COEs, on the other hand, requires a deposit of $10,000 each. They are valid for three months and are not transferable. "The bidding behaviour is very different," Mr Wong noted.
Meanwhile, dealers expect car COEs to soften in the coming months.
"The high COE is going to dampen demand for the next two weeks," said Ms Jasmmine Wong, chief executive of Inchcape Greater China and Singapore.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "I'm very confident that in the next two to three biddings, COE prices will ease."