SINGAPORE – Even as premiums for three categories of Certificates of Entitlement (COEs) surged further in the last open bidding exercise for the year, the Land Transport Authority (LTA) said it is standing firm despite appeals for its intervention to adjust the COE supply.
Yesterday, the highest increase was in the Open category – which rose by some $11,000 to hit $76,102. The premium for big cars – those above 1,600cc – is now $72,001, up about $9,500.
An LTA spokesperson said it had received appeals from the Motor Traders Association (MTA) to look into increasing the COE supply.
But, the spokesperson reiterated: "As replacement COEs make up a large share of the total COE quota, LTA has explained that the COE quota reduction seen in recent months was largely due to the slowdown in de-registrations."
Despite suggestions that the Government should prevent a sharp reduction in the COE quota, the spokesperson said "we have to be mindful of the attendant downstream impact if we try to intervene in anticipation of the lower COE supply".
One key consideration in COE policy is to ensure that vehicle population grows at a sustainable level so roads can cope.
Said the spokesperson: "We have to leave it to car-buyers to decide how much they are willing to pay for a COE to own a car. If we intervene in a rising market, we will end up with congestion problems downstream."
Rising premiums, especially in the small car category, will see most private buyers in this category shying away. COEs for small cars fell to $46,129 yesterday.
But Tan Chong Motor Sales general manager (sales and marketing) Ron Lim said: "There’s a chance of it hitting close to about $50,000 the next time around (in February when many expect another round of quota cuts)."
As for cars above 1,600cc, Hybrid Motors sales manager Geraldine Lim predicted that the COE could hit $100,000 in February – and the anticipated spike could spur a buying frenzy as Chinese New Year approaches. Said Ms Lim: "Because of the festive season, people are still buying … in case the COE jumps further."
In general, dealers say they will focus on the commercial car market next year, as COE prices in this category are more stable. The COE for this category went up by $1,500 to about $33,500.
Skyrocketing COE prices have also hit parallel importers hard, with many of them reporting falls in sales of between 30 and 50 per cent. Cars and Stars managing director Jesse Tan said the firm has now turned to the business of rentals – wedding cars, limousines and exotic cars – to stay afloat. With additional reporting by Leong Wee Keat and Saifulbahri Ismail