COE prices unlikely to fall despite higher quota for next three months
By Chen Lin
SINGAPORE – Despite a zero growth policy for the car population, there will be more Certificates of Entitlement (COE) available in the next three months, with supply rising by 12.5 per cent. But bargain hunters could be disappointed, as industry players warned that COE premiums are not likely to dip any further as there is still strong demand from buyers.
In a media release on Thursday (July 12), the Land Transport Authority (LTA) announced that the COE quota for August to October will be 27,683 — an average of 9,225 a month. That is a jump from the 24,614 COEs available from May to July, and the first time the quota has increased since the zero growth policy was applied in February.
According to the LTA, Category A (cars up to 1,600cc and engine power not exceeding 97kW) will see the biggest jump with a quota of 3,328 as compared with 2,867 from the previous period.
COEs for motorcycles will also see a spike from 1,053 in May to 1,639 in July.
When the zero growth policy first kicked in, the total COEs available from February to April stood at 25,636.
Among other things, the quota consists of replacement COEs from vehicles deregistered between April and June 2018. A total of 27,898 vehicles were deregistered during that period, including 11,080 small cars and 8,413 bigger cars.
In comparison, 24,133 vehicles were deregistered between January and March, including 9,546 small cars and 8,525 bigger cars.
However, car dealers told TODAY that the increased quota numbers are unlikely to have a significant impact on COE premiums as market demand for COEs is strong, particularly after premiums fell to an eight-year low earlier this month and sent buyers rushing to showrooms.
COE prices for Category A cars fell to S$25,000, while those for large cars above 1600cc or 97kW went down to S$31,000.
Noting the crowds at the car dealerships after the last bidding exercise, Mr Michael Lim, president of Singapore Vehicle Traders Association said the rise in COE quotas in the next three months “would help keep the price below S$30,000 for Category A”.
Mr Ron Lim, Tan Chong Motor’s Head of Sales and Marketing, also expects COE premiums to stay constant as the market is looking “extremely strong”.
He said: “This higher quota more or less will probably help to cushion the impact coming up, giving the market some buffer to prevent COE prices from going up too high. “The upcoming tender is still under the old quota, so it is a matter of how many backlog (orders) will be carried forward into the new quota.”
Mr Raymond Tang, managing director of Yong Lee Seng Motor pointed out that logically, premiums should go up when quota numbers dip, but that has not been the case since the beginning of the year as premiums decreased in tandem with lower quotas. However, the sharp dip in COE prices this time would drive up demand for cars, and result in premiums keeping steady, or increasing.
He said: “If the demand is still high, the prices will float up. What is most important (in terms of impact on prices) is the market sentiment.”
Mr Eddie Loo, managing director of CarTimes Automobile expects COE premiums for the next exercise to hit the S$28,000 to S$29,000 mark for Category A.
He noted that sales at car showrooms hit a record high after the last bidding exercise, with some dealers selling up to 300 cars just last weekend. “It only cost around S$60,000 inclusive of COE to get a car...the COE premium is very low, making it very affordable for car buyers to buy a car.”
Source: Today Online