COE premiums for smaller cars increase, decline continues for larger cars
TODAY file photo
SINGAPORE — After four months of decline, Certificate of Entitlement (COE) premiums for smaller cars rose in the first bidding exercise of the year on Thursday (Jan 4) while premiums for larger cars fell to their lowest since February 2016.
The bidding exercise was the first since stricter emission rules took effect at the start of the year, and car dealers said they expect car COE premiums to pick up further in the lead-up to Chinese New Year next month.
COE premiums for Category A (cars up to 1,600cc & 97kW) rose 8.4 per cent to S$41,400, while Category B prices (for cars above 1,600cc & 97kW) dropped 3.6 per cent from the previous exercise to S$45,289.
Open category COEs (Category E), which can be used for any types of vehicles but are usually used for bigger cars, inched down by 1.3 per cent to S$47,390.
COE premiums for goods vehicles and buses (Category C) slipped 11 per cent to S$40,101, while premiums for motorcycles continued their upward march to S$7,701, compared to S$7,501 in the previous exercise.
Uncertainty over the new emission standards under the Vehicular Emissions Scheme (CEV) – which replaced the Carbon Emissions-Based Vehicle Scheme – and its impact on rebates caused car COE premiums to slide in the past few bidding exercises, said Mr Jeremy Soh, director of used car dealer Ricardo Cars.
But the amount of rebates and surcharges various car models incur is now clear and this could have driven up Cat A prices, since majority of cars in that category are not adversely affected by the VES, said motor dealers.
The dealers, however, expect demand to drop for hybrid cars due to the relatively large reduction in rebates they qualify for under the VES, which will drive up prices. From a S$30,000 rebate under the previous scheme, a Honda Vezel Hybrid 1.5X will qualify for a S$10,000 rebate under the VES between January and June 2018, for instance.
And from a S$30,000 rebate under the previous scheme, a Toyota Prius Hybrid 1.8CVT would draw neither a surcharge or rebate under the VES.
Higher prices of larger hybrid models could have played helped dampen Category B premiums, said manager of Guan Motor Trading Sean Lim.
The rebate for a Toyota Voxy V Hybrid 1.8 V, for instance, has gone down from S$30,000 to S$10,000, increasing the price from about S$125,000 to S$138,000 after Thursday's exercise, he said.
Mr Lim plans to reduce his stock of hybrid cars by a "drastic" 50 per cent. "The fall in rebates means that customers have to pay an addition of about 15 per cent of the car price. That is a lot to stomach," he added.
Demand is likely to remain steady for car models that are less impacted by the new emissions rules.
For instance, although the Nissan Qashqai 1.2 DIG-T CVT no longer enjoys a S$5,000 rebate under the VES, any price increase could be offset by the fluctuation in COE premiums, said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor.
"If the prices still fit into the budget of customers, they will still buy it," he said.
With a motor show coming up in a week's time, Yong Lee Seng Motor managing director Raymond Tang expects car dealers to offer attractive promotions such as extra warranty period or servicing to lure buyers. Such deals would help cushion the increase in prices due to the VES, he said.
The VES – introduced to improve air quality here – for new cars, taxis and newly imported used cars took effect on Jan 1.
It takes into account four more pollutants apart from carbon dioxide — nitrogen oxides, particulate matter, carbon monoxide and hydrocarbons — and rebates or surcharges for vehicle owners under the scheme will be determined by the worst performing pollutant.
NUMBERS AT A GLANCE:
Cat A (Cars up to 1600CC & 97KW): S$41,400 (up from S$38,200)
Cat B (Cars above 1600CC OR 97KW): S$45,289 (down from S$47,002)
Cat C (Goods vehicles and buses): S$40,101 (down from S$45,112)
Cat D (Motorcycles): S$7,701 (up from S$7,501)
Cat E (Open category): S$47,390 (down from S$48,011)
