SINGAPORE - Commercial vehicle prices are set to tumble along with the six-time surge in certificate of entitlement (COE) supply for vans, trucks and buses.
To capitalise on that likelihood, motor dealers have cut prices.
Nissan agent Tan Chong Motor, the leading retailer of commercial vehicles here, has set the ball rolling by slashing its prices by up to $20,000.
"With the big increase in COE supply, buyers are all holding back," Tan Chong general manager Ron Lim said. "To entice them to come in, we're offering these non-guaranteed deals with a COE rebate at $23,000."
That means if COE premium falls by $20,000 or so, the buyers will get their vehicles. And they will get a refund of any amount below the COE rebate level of $23,000.
Multi-franchise holder Cycle & Carriage responded with even sharper cuts. It has slashed the prices of its Mitsubishi, Kia and Citroen commercial models by $30,000 "to collect orders".
Commercial vehicle COE premiums in the last two tenders were $45,906 and $47,036 respectively.
With the cuts, a Nissan Cabstar 10-footer truck starts from $69,900, down from $89,900; while an NV200 van starts from $63,900, down from $83,900.
Over at Cycle & Carriage, a K2500 is now $49,988, Citroen Berlingo is $51,988, and Mitsubishi Maxus G10 starts from $48,988 - all with COE rebate pegged at $15,000.
Toyota agent Borneo Motors meanwhile, has responded in kind, by cutting non-guaranteed package prices by $24,000 each. For instance, its Toyota Dyna 150 is now $79,900, with a COE rebate of $18,000.
Its guaranteed price remains unchanged at $103,900.
Mr Lim of Tan Chong said the cut was necessary to kick-start a slow market. "Otherwise, the whole market will come to a standstill," he noted.
Industry watchers said slashing prices would not work for dealerships which still have COEs from previous tenders in hand.
One example is Volkswagen Singapore. A senior executive said: "We will not take the risk of dumping now. Why should we cut by $20,000 when the most we lose is $10,000 (per COE) if premiums plunge?"
Volkswagen is instead selling its vehicles without COE. The eventual price a buyer pays will be dependent on the COE premium. Results of the next tender is due this Wednesday.
Isuzu agent Triangle Auto has not adjusted prices. General manager Michael Wong said: "It is very uncertain where prices will go."
The COE supply for commercial vehicles will soar from 322 per month to 2,168 per month for the May-July quota period - a rise of 573.3 per cent.
A senior industry source said premiums are likely to fall as a result, but by how much is anyone's guess. "But it won't go down to $1, that's for sure," he said.