SINGAPORE - Certificate of entitlement (COE) prices for cars and motorcycles ended lower in the latest tender on Feb 21, with premiums rising only in the commercial vehicle category.
The COE price for smaller, less powerful cars dipped by 2.8 per cent to finish at $76,801, down from $79,000 two weeks ago, while that for bigger, more powerful cars closed at $97,000 – a 5.2 per cent drop from its previous price of $102,338.
Open COE, which can be used for any vehicle except motorcycles but which ends up almost exclusively for bigger, more powerful cars, took the biggest tumble of 6.1 per cent to close at $94,006 – its lowest since May 2022.
A barometer of business sentiment, the premium for this category stayed below $50,000 up to the last three minutes of bidding.
The premium for motorcycles ended 4.1 per cent lower at $8,911, its lowest level since May 2023.
But the COE price for commercial vehicles bucked the trend by ending at $73,001, 1.4 per cent higher than its price of $72,001 two weeks ago.
Trade observers reckon the Chinese New Year holidays resulted in fewer vehicle sales, which in turn translated into lower demand for COEs. Expectations of COE supply growing in 2024 contributed to more cautious bidding.
Ms Sabrina Sng, managing director for Lotus, Polestar and Insurance at multi-franchise group Wearnes Automotive, said that with the shorter working week, it was not surprising that fewer bids were submitted.
According to the Land Transport Authority, the total number of bids fell by 4.8 per cent to 4,277.
Ms Sng noted that there was still a backlog of unfulfilled orders taken during the Singapore Motorshow in January, but the “bidding threshold” for those orders was “quite weak” owing to the generally low prices posted during the show.
She added that the relatively weak Open COE indicated that “dealers were still stuck with a lot of expensive Open COEs”. Open COE traditionally ends higher than the COE for bigger, more powerful cars, but the opposite happened in the last three tenders.
Overall, Ms Sng said bidders were more cautious because of an expected increase in COE supply in 2024, and weaker consumer sentiment owing to an uncertain economic outlook.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said COE prices will continue to trend downwards as supply grows.
But he said there were other reasons for the weaker prices. “Many dealers don’t have stock to sell. Those with stock are selling them with non-guaranteed COE. And high-end car sales have slowed down significantly since the money laundering case,” the industry veteran said. “Hence, dealers are more prudent in their bidding.”
He was referring to the anti-money laundering blitz in August 2023 where at least 10 foreigners were arrested, and assets including 77 vehicles were seized.
He said the commercial vehicle COE price remains relatively firm because there were fewer vehicles that qualify for the Early Turnover Scheme. In the scheme, owners of older, more pollutive vehicles have the option of buying a new and cleaner model at a discounted prevailing quota premium (PQP), which is a moving average of past COE prices.
Hence, more vehicle owners now turn to bidding for fresh COEs to expand or renew their fleets, which pushes up demand for commercial vehicle certificates.
