CERTIFICATE of Entitlement (COE) prices for February’s first round of bidding fell for most categories except for those used to register commercial vehicles.
Category B posted the most significant decrease, dropping by 8.6 per cent or S$9,662 to S$102,338.
Category B is for larger, more powerful passenger cars with engines of more than 1,600 cubic centimetres (cc) in capacity or that have more than 97 kilowatts (kW) of output, or for electric vehicles (EVs) with more than 110 kW.
Its fall was matched by Category E, which decreased 8.2 per cent or S$8,903 to S$100,101.
Category E is the open category that can be used to register any type of vehicle except for motorcycles. It is typically used to register vehicles that fall under Category B, which usually have the highest COE price.
The price for Category A fell 3.2 per cent or S$2,589 to S$79,000.
Category A applies to mainstream cars that have engines of up to 1,600 cc in capacity or up to 97 kW of power, or for EVs with up to 110 kW of power.
Category D, which is used for motorcycles, decreased 0.2 per cent, or S$19, to S$9,290.
Category C, which is applicable to commercial vehicles and buses, saw the only increase in price in this round of bidding. It increased by 5.9 per cent or S$4,000 to S$72,001.
In late January, the Land Transport Authority (LTA) announced the COE quota for the period February 2024 to April 2024, with Category D receiving additional “cut and fill” COEs from guaranteed future deregistrations for the first time.
The total COE supply for the period remained stable, with a 2.2 per cent increase to 14,707.
Slowed demand for passenger cars after previous spike
Industry players said that the fall in COE prices was the result of subdued market sentiment after large price spikes in the previous round of bidding and a general slowing in the lead-up to Chinese New Year (CNY).
In January’s second round of bidding, COE prices for passenger cars soared by around 30 per cent, with Category B rising 31.7 per cent to S$112,000 and Category A increasing 25.9 per cent to S$81,589. Car dealers had said increased retail demand from the Singapore Motorshow was one reason for this.
Nicholas Wong, chief executive officer for Honda distributor Kah Motor, said that the result of this round’s bidding was anticipated as COE prices are still at relatively high levels.
“Prices rebounded quite a bit in January so buyers continued to stay away. For example, Category B had a huge jump in price (in January), so it’s natural for it to drop more this time around,” he said.
Ng Lee Kwang, board adviser for Goldbell Group, said: “The drop in this round was expected after increased bidding after the Motorshow and the subsequent price rebound. Showroom traffic and order taking have been weak.”
Both Wong and Ng said that the car retail market was generally slow in the lead-up to CNY holidays, which begin on Feb 10.
Commercial vehicle skullduggery?
Commercial vehicle dealers said that the rise in Category C was a result of increased demand for COEs from heavy commercial vehicles.
The director of a commercial vehicle dealership, who declined to be named, said: “Some heavy goods vehicle dealers are unable to register through the Early Turnover Scheme, so they have had to bid for COEs instead.”
The Early Turnover Scheme (ETS) allows older diesel commercial vehicles to be replaced with newer, cleaner models and provides incentives for doing so. Since the old vehicles are replaced directly, a COE is not needed to register the new vehicle.
However, this has created a black market for “ETS vehicles”, which are sold, transferred to the new owner and then replaced, said the dealership director.
“These sellers have been holding tight to their vehicles despite the average price of Category C coming down the last few months, since they don’t want to compromise on their margins. So if they hold tight long enough, commercial vehicle sellers will end up having to bid for COE instead.”
Category C COE prices have been on a general downtrend since October 2023, when the premium was S$85,900.
“If the government wants to help limit business costs in this area and keep Category C premiums low, the only way is to pump in more COEs. The current quota, excluding ETS black market availability, is simply too few,” the dealership director said.
