COE prices for small cars plunge to their lowest since May 2011

SINGAPORE — Certificate of Entitlement (COE) prices for small cars plunged to S$45,002 today (Jan 6) in the first bidding exercise of the year, their lowest since May 2011, catching traders and analysts by surprise.

The 17.12 per cent drop in Category A premiums (cars up to 1,600cc and 97kW) led the fall in prices across all categories today, bar motorcycles, which rose to a new high of S$6,889.

It was the third straight bidding exercise in which car COEs have fallen. At the close of the tender today, the COE for small cars was half that during its peak price of S$92,100 in January 2013.

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The price difference between Category B (S$54,920, down 0.15 per cent) and Open Category (S$55,089, down 4.19 per cent) also narrowed to S$169. Premiums in these categories reached their lowest since February 2011 and November 2010 respectively.

Motor traders and transport analysts said they expected COE prices to moderate, given the uncertain economic outlook, among other factors, but they did not see the “drastic fall” in small-car COE premiums coming.

“We thought it may fall about S$2,000 to S$3,000, or maintain at the last cycle’s levels ... (We) did not expect the fall to be so quick,” said director of RTMT Motor Ricky Tay, who attributed the plunge to the recent holiday season and an uncertain economic outlook.

Vice-president of the Singapore Vehicle Traders Association Raymond Tang said prospective buyers may be holding out for deals at two upcoming motor events — Carnival @ Automobile Megamart this weekend and the annual Singapore Motorshow next weekend.

They may also have been waiting for prices to continue sliding before bidding, he added.

Agreeing, SIM University adjunct associate professor Dr Park Byung Joon said there has been speculation that premiums would fall. But it remains to be seen if today’s plunge signals the start of the downward trend, he said. “We will probably wait for two more exercises before we can determine that.”

Mr Eddie Loo, managing director of car dealer CarTimes Automobile, said the falling prices may lead to a surge in queries and send people flocking to car showrooms over the next two weekends, especially as Chinese New Year is around the corner.

“We’d also expect a slight rebound in prices in the next exercise,” he said.

Motorcycle dealer Wilson Phoon said the rise in COE premiums for motorcycles was likely due to spillover demand from those who cannot afford cars.

The last time premiums were below S$2,000 was in January 2014. Since then, prices have been on a sharp upward trend.

Businesses’ demand for motorcycles has also increased, said Mr Phoon. “Many are migrating from using goods vehicles to motorcycles for delivering goods,” he added.

Premiums for goods vehicles and buses (Category C) fell 8.62 per cent from S$46,001 to S$42,036.

Motorbike premiums are rising too high for comfort, said Mr Phoon, as motorcycles are meant to cater to the lower-income group.

Nevertheless, he expects prices to continue climbing “until (they reach) a buying resistance”.

COE bidding results (Jan 6):

Cat A: S$45,002 

Cat B: S$54,920 

Cat C: S$42,036 

Cat D: S$6,889 

Cat E: S$55,089 

Click here view COE prices from 2013.