High traffic at car showrooms after COE tweaks

Some car showrooms were packed with potential buyers on Saturday, following the changes to the Certificate of Entitlement (COE) system announced earlier this week.

Some carmakers even cut prices ahead of the changes, which will come into effect next year.

Swedish carmaker Volvo said traffic at their showroom doubled, as they dangled discounts ranging between S$20,000 and S$30,000.

The luxury car maker has five models with an engine capacity of below 1,600cc.

But these models also have a high engine horsepower of more than 130 brake horsepower.

From February next year, these will be transferred from the current category A to category B, competing with other premium brands.

Carmakers seem to be benefiting, at least for now.

Chow Yi Ling, marketing manager for Volvo Wearnes Automotive, said: "Since the announcement of the COE re-categorisation, we have seen a surge in showroom traffic. Customers are even coming in on weekdays. In fact, we even saw sales increase mainly in Cat A cars.

"Although there is a demand for Cat A cars, there are also people looking for Cat B cars at the moment, because they don't know what is going to happen after the policy sets in when all the current Cat A models are moved to Cat B, so people who are keen or ready to buy are going to buy now as well."

Customers said they are likely to buy now, as the cars they are eyeing could cost more once the new rules kick in.

The changes were made after several months of public consultation to better ensure elements of social equity in car ownership.

SOURCE

And just as expected, the car showrooms are packed with the rich buyers looking to loot a Cat A luxurious car one last time before they get shifted into the Cat B COE. With Volvo models going for discounts between 20-30k, I admit that it is quite a draw. However, take a step back and think.

If the demand rises, the COE bidding price will follow suit, and that will mean a rocketing Cat A COE, which somehow defeats any purpose of a discount isn't it? If a Cat A COE is 90k whereas a Cat B COE is 70k, the discounts will be all wiped out. Does it means these >130BHP cars will be cheaper now as compared to after they're shifted to Cat B? Not exactly so.