COE prices slip as consumer sentiment cools

Also, rising yen has cut dealers' and parallel importers' profits, hurting their ability to bid

Potential buyers at the Nissan showroom in Ubi Road on May 10, 2014.
Potential buyers at the Nissan showroom in Ubi Road on May 10, 2014. ST PHOTO: DESMOND WEE

Certificate of entitlement (COE) prices ended mostly lower at the latest tender yesterday, as a paler economic outlook dampened consumer sentiment and a rising yen reduced sellers' profit margins.

COE for cars up to 1,600cc and 130bhp settled at $55,399 - 3 per cent lower than two weeks ago, and its lowest level this year.

COE for cars above 1,600cc or 130bhp fell by 3.4 per cent to finish at $60,001, its second-lowest point this year.

Open COE, which can be used for any vehicle type but ends up being used mostly for bigger cars, bucked the trend to end 0.5 per cent higher at $61,300.

Mr Steve Poh, group managing director of diversified motor dealer Motorway, said that buyers may have pulled back in the light of the weaker stock market and poorer economic outlook.

Singapore's Straits Times Index - a key stock market indicator - has slipped from around 3,200 at the beginning of last month to below 2,900. In April it was above 3,500.

Elsewhere, with exports falling sharply last month, economists are saying that a technical recession is looming. They have also revised their 2015 economic growth forecast to 2.2 per cent, down from 2.7 last quarter.

"Prices were already lower last round," Mr Poh noted.

But Mr Neo Nam Heng, chairman of Prime Group, said a strengthening Japanese yen is also a contributing factor to the latest COE results. "The yen has risen by 8 per cent to 10 per cent in the last one month," he pointed out. "This has reduced the profit margins of many dealers and parallel importers, and impacted their ability to bid for COE."

The number of bids for car COEs (including Open) was 12 per cent lower at 4,189.

Motor traders reckon premiums will slide further in the coming tenders, even as buying interest may be stirred by a round of sticker price adjustments to reflect the latest COE results.

Meanwhile, commercial vehicle COE slipped by 3.2 per cent to end at $45,289 - also the lowest this year. Motorcycle premium took the biggest tumble of 5.4 per cent to end at $6,158, which is still among the highest this premium has ever been.

Christopher Tan

A version of this article appeared in the print edition of The Straits Times on September 24, 2015, with the headline 'COE prices slip as consumer sentiment cools'. Print Edition | Subscribe