Category B COE Records a S$40,000 Decrease
In the latest COE bidding exercise on 8 November, all categories saw a decline in Certificate of Entitlement (COE) premiums.
Category B witnessed a substantial decrease of S$40,000 (US$29,500). During the previous bidding exercise, premiums for all car categories had hit record highs. However, in the most recent exercise, Category B, intended for larger and more powerful cars, observed a sharp decline of 26.7% to S$110,001 from the earlier S$150,001.
Open Category COEs, which is versatile and can be used for any vehicle type but is mostly used for larger vehicles, also experienced a significant drop. Premiums in this category decreased by 20.9% to S$125,011 from S$158,004.
Category A, made up for cars of 1,600cc and below with horsepower not exceeding 130bhp, closed at S$95,689, down from S$106,000 in the previous exercise.
COEs for commercial vehicles, which covers goods vehicles and buses, dropped to S$78,001 from S$84,790 in the previous bidding exercise, while motorcycle premiums closed at S$10,889, a decline from S$11,201 in the last exercise.
A total of 3,133 bids were received, with a quota of 2,411 COEs available.
The Land Transport Authority (LTA) recently announced an increase in the COE quota for the November 2023 to January 2024 quarter. An additional 1,614 Category A, B, and C COEs were reallocated, supplementing the 1,895 COEs announced the previous month. This adjustment raised the total supply of COEs for the quarter to 14,388.
Analysts attributed the sharp drop in COE premiums to the short notice of the additional quota, suggesting that the market was unable to adapt in time. However, they cautioned that this decline might be a short-term occurrence, expecting a surge in showroom activity due to the reduced prices.
“As a result of this sharp drop in COE premiums, the car dealer market will start adjusting their package prices downwards. We’re likely going to see more orders being made because of this,” said Singapore University of Social Sciences (SUSS) Associate Professor of Economics Walter Theseira.
“I think COE prices will likely be volatile for a while – perhaps for the next couple of rounds. As the market adjusts, this drop may not be sustained.”
In May, the Transport Ministry had announced the advancement of quota from “guaranteed deregistrations” in peak years, increasing COE supply in the preceding six months.
Acting Minister for Transport Chee Hong Tat, addressing Parliament on Monday, stated that additional COEs would be brought forward from peak years to bridge existing supply gaps while upholding Singapore’s zero-vehicle growth policy. This policy aims to manage traffic congestion by basing the COE availability for bidding on the number of deregistered vehicles.
In response to questions from Members of Parliament about escalating COE prices, Chee emphasised the substantial difference in quotas between peak and trough years leading to higher price volatility.
“A better outcome can be achieved for all stakeholders, while still allowing the COE system to play its role as an allocation mechanism, if we can reduce the peak-to-trough ratio by using a ‘cut-and-fill’ approach to shave off future peaks and using this supply to fill the current troughs,” Chee said.
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