COE and Car Prices

[Temperament]

imo, COE will only bottom out when the stock market and /or property market crash.

[thefarside]

hi, in ur view, roughly when will the coe bottom out?

To be honest, no idea. But if you wait for a couple more biddings, and its confirmed continued downtrend, you can trade in your Lexus for a 2009/2010 model 460, probably at very good depreciation, if you don't mind buying used.

In this car market, cash is king especially if you are buying high end model. Remember to start negotiating from export value, because that's where the dealers will get if they have no buyers for the stock, which is deteriorating in value daily especially export value for cars < 3 years old. Offer them some potential for profit and you stand a chance for a good deal.

[viruskbs]

hi, in ur view, roughly when will the coe bottom out?

To be honest, no idea. But if you wait for a couple more biddings, and its confirmed continued downtrend, you can trade in your Lexus for a 2009/2010 model 460, probably at very good depreciation, if you don't mind buying used.

In this car market, cash is king especially if you are buying high end model. Remember to start negotiating from export value, because that's where the dealers will get if they have no buyers for the stock, which is deteriorating in value daily especially export value for cars < 3 years old. Offer them some potential for profit and you stand a chance for a good deal.

by export value you mean the Scrap Value?

[thefarside]

by export value you mean the Scrap Value?

Your PARF rebate + unused COE is what is called the scrap paper value. However for newer cars there are generally some body value, as the car exported can fetch some price as good used car overseas. The OMV provides an indication of what this value is... usually half or less depending on car type and model. Japanese brands usually have ok export values, but brands like Citroen, Peugeot, Skoda, Ford... good luck to u.

A used car dealer with no buyers for his stock will choose to scrap some of his cars. When he does that he will get the residual paper from LTA plus export value from the export dealer.

Body export values deteriorate rapidly after 3 years, so dealers now will have to quickly either move their 2010 stock or send for export before the body value dies off. For 2011 cars that cannot move they are almost certain to head into the export market, and the dealers will lose whatever premium they pay when they take the car in above the scrap value.

I think there are value buys in the 2008 cars, currently near five years old. You can literally offer paper plus 10-25% OMV and some dealers would bite. I also see potential value in the late 2009 segment, COE typically between 15-20k. If you can get near export price you will see very good depreciation. However prices are still sticky for this period and any buyer should wait until the screws tighten further a few biddings later.

[paullow]

hi, in ur view, roughly when will the coe bottom out?

To be honest, no idea. But if you wait for a couple more biddings, and its confirmed continued downtrend, you can trade in your Lexus for a 2009/2010 model 460, probably at very good depreciation, if you don't mind buying used.

In this car market, cash is king especially if you are buying high end model. Remember to start negotiating from export value, because that's where the dealers will get if they have no buyers for the stock, which is deteriorating in value daily especially export value for cars < 3 years old. Offer them some potential for profit and you stand a chance for a good deal.

wow, indeed i am looking at a ls460 used. i must have mentioned somewhere earlier.
ls460 omv is ard 83k. so parf at end of car life is ard 45k. body at end say worth 3-5k. at my own expected depreciation of a low 10kpa, a 3y useful life ls460 i will prepare to pay ard 80-85k. now 2007 model asking 103k. bingo, its not too far away!!! s350l also start to lower asking to 104k for april 2006 model.
the key i think is to wait patiently. like in stocks, patience may be the key to the best buys in cars.
thanks!!!

[Musicwhiz]

The Straits Times
www.straitstimes.com
Published on Mar 14, 2013
Big-car COEs plunge below those for smaller cars

By Christopher Tan Senior Transport Correspondent

A CERTIFICATE of entitlement (COE) for a budget Kia Cerato now costs far more than that for a Porsche 911, as the recently announced car-cooling measures started to bite in ways the market did not expect.

COE premiums for cars up to 1,600cc, such as the Cerato, closed at $74,689 yesterday.

This was 4.6 per cent lower than the price before the Government curbed car loans drastically last month and introduced a tiered taxation system that hit luxury cars hardest.

But for cars above 1,600cc, COEs plunged by nearly 37.3 per cent to close at a two-year low of $58,090. Open COEs, which are used mainly for bigger cars, also ended 29.3 per cent lower at $65,001, also a two-year low.

It is a rare occasion for COEs for bigger cars to fall below those for smaller cars - only a few incidents have sent big-car COEs crashing, such as the 1998 Asian financial crisis and 2008 global financial meltdown.

Motor traders said the small-car premium was supported by a sizeable backlog of orders collected before the curbs were announced.

They said credit companies such as Century Tokyo Leasing and Hitachi Capital have also come in to help buyers affected by the loan curbs.

These are applicable only to banks and finance houses, which can lend up to only 60 per cent of a car's purchase price, with a tenure no longer than five years.

Dealers added that many of the bigger cars hit by the tiered taxes had been delivered with Open COEs secured in past tenders, and that had reduced fresh demand for big-car COEs.

The tiered system, which sent prices of luxury cars up by as much as $300,000, takes effect from this month.

Chairman of the Government Parliamentary Committee for Transport Cedric Foo said the latest COE outcome was what he feared when he called for more certificates to be given to the small-car category.

Mr Foo, also the MP for Pioneer, had raised the matter in Parliament yesterday.

"With the loan curbs shifting demand to Cat A (cars up to 1,600cc) and with all the German marques there, there is upward pressure on premiums. If we don't adjust supply, this is what happens," he said.

Industry players expect the price gap between the two COE categories to close eventually.

Meanwhile, observers expect cash-rich buyers to start flocking to showrooms while others continue to hold back, hoping for prices to fall further.

christan@sph.com.sg

[viruskbs]

by export value you mean the Scrap Value?

Your PARF rebate + unused COE is what is called the scrap paper value. However for newer cars there are generally some body value, as the car exported can fetch some price as good used car overseas. The OMV provides an indication of what this value is... usually half or less depending on car type and model. Japanese brands usually have ok export values, but brands like Citroen, Peugeot, Skoda, Ford... good luck to u.

A used car dealer with no buyers for his stock will choose to scrap some of his cars. When he does that he will get the residual paper from LTA plus export value from the export dealer.

Body export values deteriorate rapidly after 3 years, so dealers now will have to quickly either move their 2010 stock or send for export before the body value dies off. For 2011 cars that cannot move they are almost certain to head into the export market, and the dealers will lose whatever premium they pay when they take the car in above the scrap value.

I think there are value buys in the 2008 cars, currently near five years old. You can literally offer paper plus 10-25% OMV and some dealers would bite. I also see potential value in the late 2009 segment, COE typically between 15-20k. If you can get near export price you will see very good depreciation. However prices are still sticky for this period and any buyer should wait until the screws tighten further a few biddings later.

Thanks for the detailed explanation

[egghead]

by export value you mean the Scrap Value?

Your PARF rebate + unused COE is what is called the scrap paper value. However for newer cars there are generally some body value, as the car exported can fetch some price as good used car overseas. The OMV provides an indication of what this value is... usually half or less depending on car type and model. Japanese brands usually have ok export values, but brands like Citroen, Peugeot, Skoda, Ford... good luck to u.

A used car dealer with no buyers for his stock will choose to scrap some of his cars. When he does that he will get the residual paper from LTA plus export value from the export dealer.

Body export values deteriorate rapidly after 3 years, so dealers now will have to quickly either move their 2010 stock or send for export before the body value dies off. For 2011 cars that cannot move they are almost certain to head into the export market, and the dealers will lose whatever premium they pay when they take the car in above the scrap value.

I think there are value buys in the 2008 cars, currently near five years old. You can literally offer paper plus 10-25% OMV and some dealers would bite. I also see potential value in the late 2009 segment, COE typically between 15-20k. If you can get near export price you will see very good depreciation. However prices are still sticky for this period and any buyer should wait until the screws tighten further a few biddings later.

Very good insight shared by thefarside - thanks. Are you in this line?

---

The middle-class dream of owning a car is fast turning into a middle-class nightmare. Not only did Cat A not crash, but the demand for it is also very high. Could be due to pent-up demand and backlog of orders though, so let's wait and see.

The surprise is in the Cat A - although on hind sight, knowing that BMW, Mercedes have muscled into this category, and strong booking, it may be the reason for the surprising strength.

What is interesting now is that a buyer of Toyota Altis will now find that it may become cheaper or about the same if he buys a Camry instead so there will be some buyers who will move to Cat B.

[brattzz]

ok, what i went thru,

2004-Hyundai Getz 1.4A
I sold to exporter 2 weeks ago.

PARF+COE REBATE = SCRAP VALUE = $10K (go to onemotoring website to see ur SCRAP VALUE), EXPORTER PAY CASH to transfer.
Body Value : $200 (EXPORTER PAY)

Total cash back: $10.2K

[paullow]

i am not in the car industry but my observation shows that it is not dissimilar to the stock market.

Because one of my uncles is in the used car trade, I was told that he was making tonnes of money when the COE was on uptrend, so much that he was able to hire 30-50 workers and even treated the whole company to R N R overseas trips once or twice a year. Imagine his company expenses.

Alas, this high COE trend was not sustainable and all things must come to an end. And I don't think large bonuses to his staff or overseas trips are likely in this year or next.

In short, when the used car trade is euphoric, one should actually turn cautious already.

I think this saying is repeated many times in the stock market.

No offence to anyone i hope. this is what i observed.