COE premiums continue rising; higher Nov-Jan quota unlikely to cool car demand, say dealers

The motorcycle COE premium rose 3.18 per cent to end at $11,201, from $10,856.

The commercial vehicle COE premium ended at $84,790, 1.29 per cent below the $85,900 from two weeks ago. This is the only COE category that did not see an increase in price.

This is the last tender exercise before the next three-month quota period from November to January, when the COE supply will increase by 12.9 per cent.

However, none of the motor dealers ST contacted believes that the increased quota for the next three months will be able to bring down COE premiums significantly.

Ms Sabrina Sng, managing director in charge of EV brand Polestar and sports carmaker Lotus at multi-franchise motor group Wearnes Automotive, said the COE supply is still too limited to address demand.

An average of 828 COEs for smaller cars and EVs will be available at each tender exercise for the next three months. This is nearly 14.6 per cent below the average of 969 such COEs for the same period in 2021. The premium for smaller car COEs then was between $35,990 and $43,501.

Komoco Motor’s commercial director, Mr Ng Choon Wee, expects the COE supply beyond January 2024 to remain relatively low, based on the number of vehicle deregistrations expected over the next few months.

The average scrapping rate in the previous four quarters is the main determinant of the upcoming COE supply.

Mr Ng believes that premiums will come down only towards the end of 2024, when the COE quota increases significantly.

BMW Eurokars Auto’s managing director, Mr Jason Lim, said the Singapore Motorshow happening in January and the Chinese New Year in February would continue to fuel demand for COEs in the new year.

In the immediate term, Mr Ron Lim, head of sales at Nissan agent Tan Chong Motor, said the three-week gap to the first tender exercise in November – which is one more week than the two-week norm – will give dealers more time to collect orders. This would make it unlikely for COE prices to fall.

He also expects buyers to continue snapping up cars till the end of 2023 before rebates offered under the vehicular emissions scheme (VES) are reduced next year.

Car models that are banded “A2” under the scheme currently get a $15,000 rebate. This incentive will be reduced to $5,000 in the new year.

“A lot also hinges on the number of VES A2 stock in the market. Be it customers snapping them up for fear of the $10,000 reduction in incentives or dealers wanting to pare down their inventory, any drop in COE premium might be minimal,” Mr Lim said.