Car COE premiums resist slow market to remain above S$130,000
Despite cautious bidding and weak sales, aggressive bids and orders on hand keep premiums buoyant
[SINGAPORE] Despite quiet market conditions creating a dip in sales, Certificate of Entitlement (COE) premiums remained at elevated levels for the first round of bidding in October, which closed on Wednesday (Oct 7).
Industry observers said the lull was in anticipation of a major car show, The Car Expo, that happens in late October, but premiums did not fall significantly as dealers still needed to obtain certificates to fulfill orders.
Ng Choon Wee, the commercial director for Hyundai distributor Komoco Motors, said: “In the current climate, even a lull period like the past fortnight won’t bring major price drops. Market leaders will still need to bid aggressively to acquire COEs for registrations and that keeps premiums up.”
Slow…
Category A, for mainstream cars, was down 1.4 per cent at S$130,001, while Category B, for larger and more powerful cars, dipped 2.2 per cent to S$130,100.
Category E, the open category, held position with the same premium as the previous round, at S$137,000.
Car dealers reported slow sales, a continuation of the situation from late September, as buyers eye a major car show on the horizon or focus efforts on their children’s PSLE and school examinations.
Adelene Tan, managing director at BYD distributor and dealer Vantage Automotive, said Category A’s bids received were almost the same, although there were more than 300 failed bids in the last round, a relatively low number indicative of weak orders.
“A dip of around S$1,900 shows we have a similar number of orders across the whole market this time compared to the previous round, and everyone is slightly weaker in sales,” she said.
“We can see that there was weaker traffic and order take.”
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Chong Kah Wei, managing director of Eurokars Auto, a dealer for BMW, said: “This drop is expected, it’s been a really slow period. Partially it’s because many car buyers are parents, and this is PSLE and exam period, so they certainly won’t be car shopping.”
Observers told The Business Times that consumers may also be putting off their purchases in expectation of better deals at The Car Expo – the last major car show of the year – from Oct 22 to 24.
That is evident in the Open category’s premium this round, which at S$137,000, is the same as that in the last round, but significantly higher than Category A or B.
This is because Category E certificates are valid for three months and are transferable, so dealers may be stocking up on them in preparation for more orders at the show.
… But not low
The fact that premiums hardly budged even during a slow period of sales is typical of the current COE market, said dealers.
“The premium stays high because everyone is bidding at their own budgeted price,” said Eurokars’ Chong. “Some have higher thresholds obviously, and it’s all buoyed further by electric vehicle rebates.”
Komoco’s Ng said: “We anticipate that the market is quiet, there’s nothing to hide, so premiums should come down. But it didn’t come down significantly. We can see (through the bidding system) that there are still players out there bidding aggressively. These are the ones who are highly motivated to secure certificates even in quiet rounds.”
Vantage’s Tan said clearing existing orders is another reason premiums may stay high amid slow sales, especially for those who do not offer guaranteed COE packages.
Cars are sold as a package including the machine and COE. With a guaranteed package, the dealer agrees to obtain both for a fixed price. For a non-guaranteed package, the dealer will attempt to obtain the certificate, usually at a lower price than a guaranteed package, within a fixed number of bidding rounds.
“I observed some (dealers) carried over orders from the last round,” Tan said. “The price threshold of COEs might have been too high for them to absorb, so they keep bidding to try and secure it at a lower price.”
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