Certificate of entitlement (COE) prices ended higher across the board in the latest tender yesterday.
Industry players said the prospect of a supply shrinkage spooked bidders, who were already on overdrive from relaxed car loan regulations and white-hot competition from private-hire operators.
COE prices for cars up to 1,600cc and 130bhp ended 1.3 per cent higher at $53,000. COE prices for cars above 1,600cc or 130bhp closed 2.5 per cent higher to hit a seven-month high of $57,508.
Open category COEs, which can be used for any vehicle type but end up being used mostly for bigger cars, climbed 2.7 per cent to finish at $57,501.
Commercial vehicle COEs closed 4.2 per cent higher at $49,890 - a 12-month high.
Motorcycle premiums rose by 4.8 per cent to finish at $6,302.
The Land Transport Authority announced last week that there would be a 10.6 per cent contraction in the COE supply for the August to October quota period.
Caused by fewer vehicle deregistrations - the main determinant of COE supply - the shrinkage is said to have triggered more aggressive bidding.
Private-hire firms, which are an increasingly popular alternative to taxis, were also believed to have contributed to the bidding fervour yesterday.
Towards the last 10 minutes of bidding, premiums for bigger cars jumped by more than $7,000.
In fact, motor traders said bidding was relatively subdued right up to the last half an hour.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the rise was "quite surprising".
"I didn't expect prices to go up," he said. "The market wasn't doing very well of late. The (showroom) traffic was still high, but fewer deals were closed."
Mr Lim said that with Uber and other private-hire players in the mix now, "it is getting tougher and tougher to predict COE direction".