Certificate of entitlement (COE) prices ended mixed at the latest tender yesterday, as bidding showed signs of losing steam on the back of continued weakness in the retail market.
The COE price for cars up to 1,600cc and 130bhp climbed 10.6 per cent to hit a one-year high of $36,704. That for cars above 1,600cc or 130bhp was hardly changed (up 0.02 per cent) at $48,010.
The price for open COEs, which can be used for any vehicle type except motorcycles but which end up mostly for bigger cars, was also flat (up 0.2 per cent) at $52,502.
Yong Lee Seng Motor managing director Raymond Tang said the market was expecting car premiums to drop by a few thousand dollars as the shrinkage of car COE quotas had already been accounted for in the past two or three tenders.
The fact that prices did not fall showed that back orders may still be healthy, even if showrooms were quiet over the weekend, he added.
The latest exercise was the first for the May-July COE quota, which is slightly smaller overall than the previous three-month quota.
Individually, car COE quotas see the biggest shrinkage (with that for cars up to 1,600cc bearing the brunt), while commercial vehicle and motorcycle quotas see an expanded supply.
At yesterday's tender, the commercial vehicle COE price fell by 10.8 per cent to settle at $28,559.
The motorcycle premium slipped 2.9 per cent to end at a four-month low of $3,352.
Mr Tang said that whether current car premiums are sustainable depended on demand in the coming weeks.
But the relatively high prices now will translate into higher prevailing quota premiums (PQPs, which are paid by motorists who want to extend the validity of their vehicle COEs).
"It may be a blessing in disguise, since high PQPs will mean fewer people extending their COEs and more cars scrapped," Mr Tang said. "And that will mean a bigger quota later."