COE premiums end mostly lower, motorcycle COE falls to $5,002 with new measures to curb speculation

SINGAPORE - The premium for motorcycle certificates of entitlement (COEs) plunged by 58.93 per cent to $5,002 at the latest tender on Thursday, in the wake of new measures to curb speculation.

Other COE prices also ended mostly lower in the first tender under the new three-month quota period, which has fewer COEs in the two car categories.

The COE premium 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 $101,001, down 2.62 per cent from the previous high of $103,721 at the April 19 tender.

For larger cars and more powerful EVs, the premium ended at $119,399, a 1.23 per cent dip from the previous high of $120,889 set on April 19.

The price for the Open category COE ended at $124,002, down 0.4 per cent from $124,501.

The price for commercial vehicle COEs – applicable to vans, trucks and lorries – ended at $75,589, which is a 0.34 per cent increase over the $75,334 seen two weeks ago.

The sharp fall brought the motorcycle COE price back to a level last seen in March 2020, when it was $4,489. It came after the Land Transport Authority (LTA) raised the bid deposit for motorcycle COEs from $800 to $1,500 from May, and required the COE to be used within a month instead of three months.

Mr Rex Tan, president of the Singapore Motor Cycle Trade Association, attributed the plunge to the implementation of LTA’s measures, but noted that the market may still be adjusting to the reduced validity period and higher bid deposits.

In the longer term, he believes that the measures will lead to COE premiums better reflecting the demand from riders wanting to purchase motorcycles, instead of dealers chasing up prices due to speculative bidding.

In the immediate term, dealers who still hold motorcycle COEs secured at earlier tender exercises – priced at around $12,000 – will likely let them lapse and lose the bid deposits. These COEs will be returned to the pool for subsequent tender exercises.

One industry insider said dealers would be suffering losses following the latest results as the value of any used motorcycles they hold would have plunged. Riders who were servicing loans for existing motorcycles may even choose to return their bikes to take out fresh loans for newer motorcycles that would cost less.

Some owners, like Mr Sarman Saidi, 52, who owns a KTM 200 Duke, said they are frustrated by the drastic drop in the COE price as they would not be able to sell their motorcycles without taking a loss. They fear that in some cases, the resale value may be lower than the outstanding loan amount – meaning the seller will have to fork out money to get rid of the motorcycle.

Mr Sarman said: “Anyone who has bought a motorcycle in the last two years would be stuck.”

In contrast, motorcycle enthusiast Yap Jianjie, 33, described the latest result as a “breath of fresh air”. He said owners of motorcycles with COEs that are nearing expiry will probably be hoping for the price to remain low in the coming tenders, as this would lower the amount they have to pay to revalidate their COEs and keep the motorcycles on the road.

Despite the plunge in COE price, it may be premature to expect the total cost of buying motorcycles, which is a combination of the motorcycle price and COE, to fall by the full extent of the drop.

After the tender exercise closed on Thursday, some motorcycle dealers informed prospective buyers of price hikes. In one instance shared in a motorcycle online chat group, the quote for a new Yamaha YZF-R15 excluding COE was raised from $6,000 to $9,000.

Many motorcycle purchases are done with financing offers from the dealers. By raising the motorcycle price to partially cover the dip in COE premium, the dealer will be able to offer the buyer a sufficiently high enough loan to still reap interest earnings.

In terms of cars, dealers had mostly expected the COE premium for smaller and less powerful cars and EVs to drop after it hit an all-time high of $103,721 in the last tender exercise. They said their showrooms have been extremely quiet.

Mr Nicholas Wong, general manager of Honda agent Kah Motor, hopes that the price of such COEs will dip further in the coming tender exercises.

Cue. (2023n, May 4). COE premiums end mostly lower, motorcycle COE falls to $5,002 with new measures to curb speculation. The Straits Times. https://www.straitstimes.com/singapore/transport/coe-premiums-end-mostly-lower-motorcycle-coe-falls-to-5002-with-new-measures-to-curb-speculation