Commercial vehicle COE costliest

Car buyers at the Honda showroom at Leng Kee Road, on Jan 10, 2016.
Car buyers at the Honda showroom at Leng Kee Road, on Jan 10, 2016. ST PHOTO: KUA CHEE SIONG

In a rare turn of events, the certificate of entitlement (COE) price for vans, buses and trucks ended higher than both car premiums at the latest tender yesterday.

COE prices for cars up to 1,600cc and 130bhp rose by 4.7 per cent to close at $45,000. Those for cars above 1,600cc or 130bhp rose by 1.3 per cent to finish at $47,604.

COE premiums for commercial vehicles, however, sprinted ahead to close 8.6 per cent higher at $48,890 - a seven-month high.

The last time this figure ended higher than both car premiums was in 2009, when an oversupply of the latter depressed prices.

Open COE prices climbed 6.6 per cent to close at $48,002. And motorbike premiums rose by 2.4 per cent to end at $6,503 - identical to the premium in February's first tender.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the latest set of results was fuelled by a sizeable cut in COE supply for commercial vehicles.

In the February-April quota period, there is a 33 per cent shrinkage in commercial vehicle COE supply. This is because more vehicle owners are subscribing to the Early Turnover Scheme (ETS), which offers incentives to owners to replace their old models with new, less polluting ones. Car COE supply, however, rises by 21 per cent.

"When the quota was rolled out, it was the Chinese New Year period," Mr Lim said. "Most businesses were not looking at replacing their vehicles then."

But now, they are flocking to showrooms. "Even though 60 per cent of buyers go for ETS, the COE quota is too small for the remaining 40 per cent," he said.

Mr Lim, however, does not expect commercial vehicle COE premiums to rise much further.

One outcome of the freak results is that "Open COE can now be used for more categories", he said.

Open COEs usually end up almost exclusively for bigger cars.

Motor traders said a huge order backlog is keeping big-car COEs buoyant, while aggressive pricing and new model launches - such as the new Hyundai Elantra, which starts from below $93,000 - are fuelling interest in smaller cars.

But Mr Lim said bidding remains restrained. "No one wants to see COE going too high and demand drying up again," he noted. Christopher Tan

A version of this article appeared in the print edition of The Straits Times on March 10, 2016, with the headline 'Commercial vehicle COE costliest'. Print Edition | Subscribe