COE premiums for Category A cars hit record high of S$119,003

SINGAPORE: Certificate of Entitlement (COE) premiums closed higher across the board on Wednesday (Sep 17) in the first tender since the announcement that rebates for buying electric vehicles will shrink from 2026.

COE prices for smaller cars in Category A closed at a record of S$119,003 (US$93,171), a 10.3 per cent increase from the previous high of S$107,889 in the bidding exercise two weeks ago. 

Premiums for larger and more powerful cars in Category B rose to S$136,890 - up 7.4 per cent from the figure of S$127,501 in the previous tender.

Open category COEs, which are used mainly for large cars, rose 9.9 per cent, from S$127,901 to S$140,502.

COEs for commercial vehicles, which include goods vehicles and buses, rose to S$72,501 from S$71,556 in the previous bidding exercise.

Motorcycle premiums closed at S$9,209, up from S$9,101 in the last exercise.

A total of 5,364 bids were received, with a quota of 3,135 COEs available.

Authorities had expected a short-term increase in COE prices following the Sep 8 announcement that EV incentives would be scaled down from next year, although the initiatives to encourage drivers to choose vehicles with lower emissions will be extended.

Car dealers told CNA that Wednesday's COE premiums showed that buyers were rushing into the market before the reduction in rebates. 

BUYERS RUSHING TO BEAT DROP IN EV REBATES: DEALERS

Mr Benjamin Loo, chief operating officer of car dealership CarTimes Group, said the impending increase in car prices due to changes to the Vehicular Emissions Scheme (VES) and the Electric Vehicle Early Adoption Incentive (EEAI) are “significant”. 

"There has been pent-up demand due to the high COE in the past few years and this is also the reason that demand has been high despite the high prices. I think unless there are any additional adjustments from LTA, prices would still be on the upward trend for a while," Mr Loo added.

He also cited "aggressive promotions" from dealers and increased sales due to falling car loan interest rates.

Mr Anson Lee, director of car dealer Euro Performance Asia, said sales jumped last week due to BYD's "100-hour" promotion, contributing to the record high Category A premiums. 

COE prices are expected to rise again in the next bidding exercise, which takes place after the car expo.

Mr Loo added: "Prices won’t fall so soon, and even if it starts falling, it will unlock additional demand from customers.

"I think the time of COE at S$30,000 might not come back, and in future, 'cheap COE' might be at the S$70,000 to S$80,000 range."

Mr Raymond Tang, managing director of Yong Lee Seng Motor, believes prices will only start to fall at the end of 2027 or the start of 2028 because there will be more cars scrapped at that time.

"These two years, the scrap value is very low … so a lot of people may choose not to scrap (their cars) and pay for a five-year COE," Mr Tang said. "But the scrap value will go up by 2027 or 2028."

When the scrap numbers increase, more COE will be recycled back to the pool, and this may stabilise prices, he added.

Euro Performance Asia’s Mr Lee advised buyers not to panic after the VES and EEAI announcement.

"Just wait for a while and the COE may soften a bit then we decide,"  he added.

SPIKE IN COE PRICES EXPECTED: LTA

The Land Transport Authority said on Wednesday that the spike in COE prices was expected, following the news that EV incentives from EEAI and VES will be reduced. 

It said that demand for EVs has also gone up because of the availability of cheaper EV car models, especially from China. 

"We encourage prospective car buyers to bid prudently for COEs, given the next COE bidding exercise is a three-week exercise and there is an upcoming car show (at the end of September), which generally results in higher COE (prices)," the authority said.

"We will continue to increase (the) COE quota up to the peak supply year around 2026."