By Leow Ju-Len

FOLLOWING their dip in early July, COEs continued to slide and have fallen to levels not seen since the early part of 2004. Category A COEs (for 1.6-litre cars and below, as well as taxis), ended the second tender exercise of July at $27,019, a $750 dip.

The COE for large cars closed a significant $1,989 lower than the previous round at $27,001, while Open Category COEs fell $707 to $27,792.

Most of the industry sources CarBuyer spoke to feel that the decrease in COE prices can be put down to a simple fall in demand. “At this point in time, the whole market is very weak,” said one sales and marketing manager.

Within the car industry, it’s common for managers from rival car companies to obtain information secretly from each other, in a sort of spy network. While the news gained this way is possibly apocryphal, and should thus be taken with a grain of salt, it can nonetheless come in handy.

The gossip currently doing the rounds is that Mazda Motor, which has enjoyed plenty of success with the hot-selling Mazda 3, has run out of stock for the moment. And running out of cars to register means not having to bid for COEs, thus easing pressure on Cat A. “Mazda has no stock until September,” said one source. “More or less, they’ve cleared off their (backlog of) orders.”

Other players believe that the Thai-built Toyota Camry, which was launched here on June 4th, has met with a cooler-than-expected reaction. More than one car dealer has told CarBuyer that it isn’t selling as well as its Japan-built predecessor, which would account for a fairly substantial fall in demand for Cat B COEs.

The latest Motor Traders Association figures show that 82 new Camrys were registered alongside 213 old Camrys in June, making for a total of 295. In May, when only the Japanese Camry was available, 367 were registered. This suggests a drop in sales, but what MTA figures don’t show is whether the car is available for registration in the first place – it could be that Camry sales are as strong as ever, but Borneo Motors doesn’t have stocks to put on the road.

Whatever is the case with the Camry, another car affecting Cat B COEs significantly is the new Honda Odyssey. Its popularity is probably what fuelled demand for Cat B and Open Cat COEs, all the way until July’s first tender exercise.

Kah Motor collected orders for the fast-selling Multi Purpose Vehicle early in 2004, so when stocks arrived in June, the company got to work getting them registered. 436 Odysseys were put on the road last month alone.

Those orders appear to have flushed through the system now, which could explain the hefty $1,989 fall in Cat B COEs for this round.

While COEs may have fallen, however, the car industry isn’t glad. “We’re happier with an upswing,” said one manager we spoke to. A rise in COE prices is a sign of healthy demand, after all. And while a steep drop in COEs can trigger off the price-cutting to lure buyers to showrooms, a slow decline is often disastrous. “The slide (in COE prices) must be substantial enough. If it goes down bit by bit, the market will try to catch the bottom,” said the manager.

And July’s fall was just the sort of bit by bit drop to cause the market to react with a wait-and-see attitude, where buyers hold back their purchases to see how low COEs can go. Car dealers have cut their prices accordingly, however, and at least one dealership clearly expects COEs to fall further: it’s pretty telling that Komoco Motors has slashed the price of the Hyundai Sonata by a whopping $5,000.