COE and Car Prices

The Straits Times
Apr 14, 2012
COE prices set to soar even higher
Supply likely to shrink further in the second half of the year

By Christopher Tan

WHETHER you are in the market for a small car or a big car, brace yourself for a higher price tag soon.

Certificate of entitlement (COE) prices, which are already at their highest levels since the mid-1990s, are likely to rise even more in the coming months.

This is because the supply of COEs, which is determined every six months and which hinges on the number of vehicles scrapped, looks set for yet another shrinkage in the second half of the year.

Motorists in Singapore must secure a COE at fortnightly auctions before they can own a vehicle here.

The latest first-quarter data from the Land Transport Authority (LTA) showed that the average number of cars taken off the road in the first three months of this year was lower than in the preceding six months.

From January to last month, an average of 515 cars up to 1,600cc were scrapped per month - less than half the monthly average of 1,146 cars from July to December last year.

Buyers with their eyes on cars above 1,600cc may not have to fork out as high an increment: In this category, the monthly average was 602, compared with 528 from July to December.

On the whole, the average number for all cars deregistered in the first quarter was 1,130, about half the average of 2,176 in the preceding six months.

If the deregistration numbers do not vary significantly in the next three months, there will also likely be fewer Open COEs, which are used mainly by buyers of bigger cars.

'In the best-case scenario, the total number of car COEs will remain the same,' said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor.

'In the worst case, there will be 43 per cent drop in supply.'

In arriving at his projection, Mr Lim took into account the fact that the number of cars scrapped in the first three months had actually been creeping upwards month on month.

But he said this is unlikely to match a spurt in deregistrations seen in the preceding six months - especially in the months of July and August.

On the back of the slower scrappage is a lower vehicle population growth rate that kicks in from the second half of this year.

If the worst-case scenario materialises, cars up to 1,600cc 'will bear the brunt of the drop', said Mr Lim.

He projected a 65 per cent shrinkage for this category - the mainstay for most car buyers.

COE in this category is currently at $58,501. If Mr Lim and other motor traders are right, this figure could rise to as high as $80,000 later this year.

They pointed to two other factors that will fuel the rise: more premium and luxury brands entering this segment with smaller engines, and continued strong demand from taxi companies.

On the luxury front, demand for cars remains in the fast lane despite sky-high prices.

In the first three months of this year, Mercedes-Benz emerged the top seller, followed by BMW and Toyota.

Even Porsche, usually a niche make, is among the top 10 bestsellers.

COE for bigger cars is currently at $83,700. The Open COE is $84,590. The last time premiums trended higher than these levels was in the mid-1990s - and only briefly.

This time, Mr Karsono Kwee, executive chairman of Eurokars Group, which distributes Porsche and Rolls-Royce among other brands, said he reckons COE prices for a set of luxury wheels will reach $100,000.

'It will not be pleasant for anybody, but I think it will happen,' Mr Kwee said.

At the launch of the Lexus GS on Thursday, Mr Koh Ching Hong, managing director of Lexus agent Borneo Motors, said it had garnered 200 bookings for the luxury sedan, which starts from around $250,000.

Meanwhile, the high prices have persuaded more people to go for used cars.

Used car sales continued to rise in the first three months, according to the LTA.

Last month, 7,648 cars changed hands - the highest number in over a year.

The COE supply for August to next January should be announced by July.

christan@sph.com.sg

wonder where all the COE's money go to?

public transport upkeep and expansion?

Ah, the logic of the argument. Irrefutable, eh?

The Straits Times
Apr 16, 2012
COE prices up because economy is doing well, says Lui

By Goh Chin Lian

COE prices are soaring because the economy is doing well and not because the Government is further slowing the growth in the vehicle population to 0.5 per cent, as that kicks in only in August, Transport Minister Lui Tuck Yew said yesterday.

He was responding to a steady stream of complaints about certificate of entitlement (COE) prices - now at their highest in more than a decade - from residents during a walkabout in Cheng San.

Mr Lui said high COE prices are due to strong demand - with wages still on the rise, dealers introducing new car models and more people bidding now in expectation that premiums may rise further.

Come August, the annual allowable vehicle population growth rate goes down to 0.5 per cent, from 1.5 per cent today and 3 per cent before 2009.

During a dialogue with the minister, retiree Ronnie Lim, 67, argued that taxi firms, which are allowed to bid for the same category of COEs as buyers of cars up to 1,600cc, are driving up prices.

The COE premium in that category is now at a 15-year high of $58,501. He wants cab operators to be exempted from bidding if they are replacing their fleet, and instead pay the prevailing premium at the time of registration.

One woman was unhappy that those bidding for a second or third car were pushing up premiums.

Door installer Koh Soo Mown, 52, said he was worried that replacing his eight-year-old van will now cost more, with the commercial vehicle COE premium at $53,989.

On taxi firms, Mr Lui noted not all of their 190 bids were successful in the latest bidding exercise. Excluding them would not have made a big difference, he added. The category for taxis and cars up to 1,600cc had 637 available COEs.

The option of creating a separate COE category for taxis has been explored but it is hard to fix the number of cabs for the seven competing firms, Mr Lui said.

The policy to let them bid in the category for cars up to 1,600cc is a concession to try to make sure they do not raise taxi fares unduly.

During the dialogue, Mr Lui was also asked about Professor Lim Chong Yah's proposal to raise wages at the bottom by 50 per cent over three years and cap wages at the top.

He said he personally would not rush to dismiss Prof Lim's ideas as he is a very learned man who chaired the National Wages Council for many years.

But he would not rush to embrace Prof Lim's proposal either, without considering its consequences. These are that many workers may end up retrenched while Singaporean and foreign talent leave for companies abroad.

The second Cabinet minister to comment on the wage hike plan, Mr Lui said the Government's approach is to close the income gap gradually through various measures.

'The fear is that you do too much, too suddenly, you have a situation like in the mid-80s when we had a major recession,' he added.

This is really getting nutty! $92,000 just for the RIGHT to own a car?

The Business Times
April 19, 2012
Cat B COE closes in on $100,000 mark
By Joyce Hooi

THE latest round of bidding for Certificates of Entitlement (COEs) saw small cars get an even bigger price tag, while big-car premiums are now just $9,000 shy of the $100,000 mark.

Category A car premiums - for cars 1,600cc and below in engine size - surged $5,700 to $64,201 from $58,501 in the previous exercise, the biggest leap made this year.

This follows what the motoring trade is calling the "extremely good" reception to Mercedes-Benz's C180 Kompressor sedan - a Category A car.

This trajectory of Category A prices is not expected to change course any time soon. 1,011 bids were received in this last round of bidding, of which only 618 were successful. This leaves another 393 bidders to try their luck in the next bidding round, propping up demand for the COE.

Category B - for cars above 1,600cc - hit yet another high not seen since 1994, at $91,000, up $7,300 from $83,700 in the last round of bidding.

The category's premium has risen by almost a third since the beginning of the year when it opened at $65,801.

Category E, which currently moves in tandem with Category B, is also headed for the $100,000 mark, at $92,010. This is a $7,420 increase from its premium of $84,590 in the previous bidding round.

Even as premiums have steadily increased this year, the first quarter of the year saw new car registrations bounding 8.9 per cent to 7,510 units, with Mercedes-Benz leading the pack.

The rise in premiums from yesterday's COE tender did not spare utility vehicles and motorcycles.

Category C - for goods vehicles - saw a $3,600 hike in the premium to $57,589.

The motorcycle category - Category D - also saw the premium inching up to $1,924 from $1,896.

wait till august where the growth rate will be cut from 1.5% to 0.5%, 100k will be an easy feat for category A. Seemed like they only want the super rich to own cars

Welcome to Singapore. Where only the rich will drive cars and live in good class bungalows Poor Peasants stay in expensive pigeon coups and take the lousy MRT and buses to work.

at the start, LKY and LHL have differing view on car ownership. LKY believes in controlling car ownership while LHL believes that everyone should have the right to own a car. LHL prefers to curb car usage instead through measures like car pooling, peak hour car, erp and fuel tax.

Then when the new transport minister comes in, he wants to cut growth rate to 0.5% as he says that Singapore road is not expanding at similar rate. Obviously the COE prices will spike since number of COEs= deregistration rate + growth rate. At least, they should wait until the more buses and the downtown line are ready then they try to curb the car ownership.

Anyway, I am sure that even if you take cab to and from work everyday it will still be cheaper than owning the car

(19-04-2012, 10:17 AM)shanrui_91 Wrote: At least, they should wait until the more buses and the downtown line are ready then they try to curb the car ownership.

I think it is right to start controlling car owenership right away instead of waiting for more buses and more train lines to be ready. By then, the situation could be a lot more tricky to control than now. But the state we are in now is to a large extend the impact of the failures of some past policies, transport policy is just one of it. This goes to show some of our ex ministers are sleeping on the job!

But I am really amaze that people are still buying car at this crazy prices. Same thing for property. Singaporean boleh!

PM 2.5 fine particles will be more and more in singapore roads - i bet lung diseaes will rise even more in the coming years

PM 2.5 fine particles will be more and more in singapore roads - i bet lung diseaes will rise even more in the coming years