Car COE premiums fall in first tender after quota increase; Open category COE hits record $125,000
SINGAPORE - The price of certificates of entitlement (COEs) in two car categories fell, while the Open category premium set a record at $125,000 on Wednesday, in the first tender exercise since the quota for Category A and B was increased due to a one-time adjustment.
The COE premium for motorcycles bounced back up after the drop seen at the last tender exercise two weeks ago. At $10,602, the premium for motorcycle COEs now costs more than twice as much as the $5,002 price set on May 4.
When the tender exercise closed at 4pm on Wednesday, 1,438 bids had been received for the allocated quota of 571 motorcycle COEs – significantly higher than the 510 to 678 bids registered at earlier exercises in 2023.
The premium for Category A COE, which is for smaller cars up to 1,600cc and 130bhp, as well as for electric vehicles (EVs) with up to 110 kilowatts of power, finished at $92,000, down 8.91 per cent from $101,001 before.
For larger cars and more powerful EVs, which fall under Category B, the premium ended at $113,034 – a drop of 5.33 per cent from $119,399 previously.
The supply of COEs for the two car categories received a boost from the one-time adjustment announced in Parliament on May 8. The number of COEs for smaller, less powerful cars was raised by 24 per cent, while larger, more powerful ones saw an addition of 15 per cent more COEs.
The Open category COE price of $125,000 was 0.8 per cent higher than the $124,002 set at the previous tender, and broke the record of $124,501 set at the second tender in April 2023.
The price of commercial vehicle COEs, applicable to vans, trucks and lorries, ended at $77,501, up 2.53 per cent from $75,589.
Motor traders said they expected the premiums for the two types of car COEs to drop due to the increase in supply.
However, Ms Sabrina Sng, managing director in charge of Swedish EV brand Polestar at Wearnes Automotive, was surprised by the record price set for Open category COEs. She noted the big gap in price – $11,966 – with the Category B COE, which closed at $113,034.
The price of Open category COEs tends to end closer to the price of COEs for bigger, more powerful cars.
She said: “Customers would only be expecting to pay $113,000 for a COE. Which dealer would have enough margin to absorb the additional $12,000 or so to use an Open category COE?”
With the next tender three weeks away – one more than the usual two-week gap – some motor dealers may have decided to have more Open category COEs in hand to register cars instead of waiting for the next exercise. This is because Open category COEs can be transferred before they are used to register any type of vehicle other than motorcycles.
In the motorcycle COE category, nearly 700 bids were entered on Tuesday evening, almost a full workday before the tender exercise was due to close. This is different from the usual market behaviour, where the bulk of the bidding is done in the final hour of the exercise.
Mr Fude Poh, general manager of S.1 Motoring, believes individual buyers hoping to secure a cheaper COE were behind those early bids, rather than motorcycle dealers.
He said the latest result reflects the big bump in demand for motorcycles following the drop in COE price two weeks ago. This, in turn, contributed to the COE premium more than doubling over the previous price.
The price of a motorcycle that a buyer pays typically consists of the cost of the motorcycle and the price of the required COE. Some dealers would have COEs secured earlier that can be transferred to the buyer immediately.
Since the motorcycle COE premium fell from $12,179 to $5,002, some dealers have upped the retail price of motorcycles by as much as $7,000 to $8,000. This effectively negated the change in COE premiums.
Those who have committed to a new motorcycle sold at higher prices will now also have to bear the pricier COE.
Besides enabling dealers to make a similar amount of profit in terms of loan interest payments, the higher asking price also helps dealers cope with the cost of the COEs that they may have secured before the latest measures.
Depending on when they were secured, these can cost as much as $12,390 each.
Alternatively, dealers holding these pricier COEs can forfeit the $800 bid deposit.
The deposit for motorcycle COEs secured from May 4 onwards has been raised to $1,500, and is valid for one month, down from three months.
Cue (2023) Car Coe premiums fall in first tender after quota increase; open category Coe Hits record $125,000, The Straits Times. Available at: https://www.straitstimes.com/singapore/transport/open-category-coe-hits-record-125000-car-coe-premiums-fall-in-first-tender-after-quota-increase (Accessed: 18 May 2023).