COE Crunch

COE prices for cars soared to new highs this year in the latest bidding exercise, with the premium for big cars reaching nearly S$76,000.

The jump in the Certificate of Entitlement (COE) prices comes just days after the Transport Ministry said it would cut the annual vehicle population growth rate to one per cent next year from the current 1.5 per cent.

On Wednesday, the COE price for big cars registered the steepest jump, of S$12,289 to S$75,889. This was followed by the Open Category COE which rose S$8,542 to S$73,600.

The COE premium for small cars rose S$5,823 to S$56,112.

The premiums for big and small cars are the highest so far this year. For the Open Category, the highest COE price so far this year was S$75,789, seen in January.

Car analysts said the latest results are not surprising as the recent announcement had caused some panic among potential buyers.

39-year-old Sharif Maricar, a real estate agent, said: "Before the government made the announcement, I was actually thinking of waiting for another one or two years because I expected the COE to go down. And after the announcement, it is more of a knee-jerk, so the panic part came about."

Mr Maricar isn't the only one to panic.

Distributor Kia Motors said sales doubled over the weekend following the announcement.

"A lot of people thought that there would be an increase in prices in the short term. So a lot of people rush in to buy. So a lot of the distributors also rush to secure the COEs, and therefore being a demand and supply game, you drive up the prices," said Chin Kee Min, senior manager of distributor Kia Motors.

However, Mr Chin added that the Transport Ministry's decision to cut vehicle growth will not necessarily cause COE premiums to increase eventually.

He said: "The COE quota is determined by both growth and deregistration, so there are two factors. Growth might be cut but there may be a chance that deregistration is actually going to increase, because more cars are going to be deregistered.

"10 years ago, the government started to release more cars, so both factors may end up mitigating each other and you won't see a huge fluctuation in the COE quota."

The COE prices for goods vehicles and buses increased S$4,210 to S$37,011 while the COE premium for motorcycles went up by S$13 to S$2,091.

The Land Transport Authority (LTA) received 2,864 bids for the second bidding exercise in October for COEs.

- CNA/cc/ls


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The COE crunch is set to get worse in coming years. In the future, other than Germany, Singapore might be the only country where BMW n Merc dominate the roads.