SINGAPORE - Certificate of entitlement (COE) premiums shot up across the board at the latest tender exercise that closed on Wednesday, with the Open category price surging to an all-time high of $116,577.
There were new records set in two other categories – larger cars and motorcycles.
The latest tender is the first one under the new quota period from November to January, which has 13.8 per cent fewer COEs available than in the previous three-month period from August to October.
In the category for cars above 1,600cc or 130bhp, and electric vehicles (EVs) with more than 110 kilowatts (kW) of power, the premium rose from $110,000 to $115,388 – a 4.9 per cent increase that broke the previous record of $113,000 set in September.
The Open category premium of $116,577 was $8,574 above the price of $108,003 set at the previous tender, an increase of 7.9 per cent. It broke the previous record high of $114,001 set in the second tender exercise in July.
The motorcycle COE premium climbed to a new high of $13,189 – an increase of 3 per cent from $12,801 at the previous tender.
For smaller and less powerful cars and EVs, the COE price rose by 7.6 per cent from $81,089 to $87,235.
The price for commercial vehicle COEs is now $76,302, up 8.7 per cent from $70,201 and nearing the all-time record of $76,310 set in October 2013.
Motor dealers said the higher premiums were largely expected, given the lower supply of COEs available for tender and the three-week gap from the last exercise, which gave dealers an additional week to pick up orders.
Some said that news of the COE quota reduction helped them because there were customers who came to accept that COE premiums would not be coming down any time soon, so they decided to buy a car now rather than wait.
Polestar said it did not increase its prices after COE premiums rose at the October tender, which helped boost sales.
The spokesman for Eurokars Auto, the new dealer for BMW, said there was healthy interest at its showroom and it had managed to “close some deals” since opening for business in October.
While it may appear that some dealers are coping well with the reduced COE supply, Mr Nicholas Wong, general manager of Kah Motor, flagged the reduced number of bids received at the tender as a sign that the car market is not well. Most motor showrooms have been really quiet at the past weekends, he said, describing market sentiment as “really, really bad”.
There were 640 bids in the category for larger and more powerful cars and EVs, down from 848 bids at the previous tender. There was a smaller drop in the category for smaller and less powerful cars and EVs, with 27 fewer bids received than the 714 bids in October. This suggests that dealers do not have as many unfulfilled orders in November as they did before.
Mr Wong said: “Even if there is no significant influx of fresh orders after the previous exercise, it will take at least two to three rounds of tenders before COE premiums can really come down. So, in short, COE premiums will stay high, even when demand is weak.”
In addition, he believes that the COE premium for smaller cars has been under more pressure since EVs with 110kW of power qualified for this type of COE in May.
Incentives given to EVs give them an edge over non-EVs competing for COEs in the same category, he said. Under the Electric Vehicle Early Adoption Incentive, such vehicles receive up to $20,000 in rebates. The relevant car emission schemes also favour EVs over typical combustion engine cars in terms of rebates.
Car-sharing service BlueSG was reported in September to be adding up to 500 new Opel Corsa-e hatchbacks to its fleet. While it is unlikely that the company will be rolling out the entire fleet in 2022, even a slow ramp-up of these vehicles will have an impact on COE premiums when there are so few COEs to go around.
