Drop in car COE quota smaller than expected

As expected, the COE quota for the next six months has a smaller allocation for the passenger car categories, but not by as much as some motor distributors had feared.

The total quota for the period from February to July 2013 will be 19,263 - marginally down from 19,351 for the August 2012 to January 2013 period - due to relatively low vehicle deregistrations and a lower vehicle growth rate (now at 0.5 per cent based on the vehicle population as at Dec 31, 2012, from one per cent previously).

As a result, the number of COEs available in Category A (for cars below 1,600 cc) will be 15.1 per cent lower at 667 per month, while Cat B (for cars above 1,600 cc) will dip 13.7 per cent to 605.

Cat E (the open category which currently tracks Cat B) will slip 1.9 per cent to 476.

Only Cat C (for commercial vehicles) and Cat D (for motorcycles) will enjoy a bigger crop of COEs. Cat C gets 451 each month, or a 25.3 per cent jump, while Cat D will have 1,012 COEs, or up 13.2 per cent.

"Cat B was as forecast. But we were expecting a slightly bigger cut for Cat A of 20 per cent, so 15 per cent doesn't sound so bad," said Chin Kee Min, senior manager of Cycle & Carriage Kia. "However, since the base is already so low, I suppose whether it's 15 per cent or 20 per cent doesn't make much of a difference."

Taxis were one of the variables at work, according to George Lee, general manager of Opel distributor Auto Germany and Chevrolet dealer Alpine Motor.

"There were more Cat A COEs because some taxis - 402 units to be exact - were deregistered without any replacement. These 402 were put back into the system as fresh COEs."

The number of Cat E COEs was another surprise. Some distributors had expected this category to suffer a much bigger contraction but instead, it dipped by just 1.9 per cent.

"Cat E benefited from high motorcycle scrappage," said Kia's Mr Chin, who pointed out that the deregistrations of two-wheelers had been higher than normal in the second half of 2012.

But Alpine's Mr Lee said that Cat E was also boosted by taxis. From Aug 6, 2012, taxis were moved to Cat E from Cat A. Because of this, a net adjustment of 304 COEs was made to the Cat E quota, according to the Land Transport Authority.

Looking ahead, Mr Lee said that with the overall contraction in passenger car COEs, he expects premiums to continue rising.

"The festive season is also around the corner, while luxury distributors will continue to dominate because of their bigger volumes and margins. Ultimately there are just too few COEs to go around."

SOURCE

There you go, another round of reduction for the next 6 months. A $100k COE value will sure be a norm soon but the good news is that commercial vehicles will have a 25% increase in quota, which is good for business.