COE prices rise on supply drop

Certificates of entitlement (COE) rebounded across the board at the latest tender yesterday on the back of a smaller quota.

The COE premium for cars up to 1,600cc and 130bhp finished 0.9 per cent higher at $33,000. The COE premium for cars above 1,600cc or 130bhp closed 6 per cent higher at $37,102 - its highest level since January.

The price for the Open COE, which can be used for any vehicle type except motorcycles but ends up mostly for bigger cars, ended 4.3 per cent higher at $36,502. This is also its highest since January.

The commercial vehicle COE price ended 0.9 per cent higher at $24,100. The motorcycle premium finished 18.3 per cent higher at $7,701.

Industry watchers attribute the all-round increase mainly to a sharp shrinkage in COE supply for the August to October period. They point out, however, that the price increases were small in relation to the supply contraction.

Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "If these were normal times, COE prices would have shot up by a lot more."

Mr Nicholas Wong, general manager of Honda agent Kah Motor, said "market sentiment is still bad" and pointed to the number of bids submitted for car COEs, which fell by 18 per cent to 4,816.

He attributed the double-digit spike in motorbike COE to an almost 50 per cent shrinkage in the quota for two-wheelers. And because of that, "dealers who are able to hoard are going all out to hoard".

Motorcycle industry players said that without change to the current system which is open to speculation, premiums will continue to be at the mercy of bigger dealers.

Meanwhile, Mr Neo said consumers should not rush to buy now, adding: "There is no need for panic, there will be ample supply ahead."

He said the latest price increases were partly due to buyers willing to "top up" on COE premiums for fear of not being able to secure the cars they have booked. 

A version of this article appeared in the print edition of The Straits Times on August 06, 2020, with the headline 'COE prices rise on supply drop'. Print Edition | Subscribe