By Colin Yong

MOTOR DISTRIBUTORS ACROSS the island have slashed prices of their Category B (above 1,600cc) cars by up to $4,000 as COE premiums for large cars hit a new low after December’s second open bidding exercise closed on Wednesday.

At $9,001, the price of the COE is at its lowest since the category was formed in May 1999. Few in the trade had predicted it would drop below the $10K mark this year – the lowest it had been before this round was $11,002 in early October, and that fall triggered a buying
spree that sent prices straight back up.

This is perhaps why market leader Toyota and number three Hyundai have been relatively conservative with their price cuts after Wednesday’s results. Both took ‘only’ $2,000 off their Cat B models even though
the COE premium plunged by $4,300.

This indicates that these brands’ distributors expect an influx of buyers over the next fortnight that will push demand for Cat B COEs – and thus their price – up in the next round. If this happens, distributors who take in orders at rock-bottom prices may not have the margins needed to put in high-enough COE bids, leading to late or non-delivery of cars and dissatisfied buyers. Mitsubishi and Nissan seem less concerned about this though, dropping prices of their Cat B cars by $3,000 and $4,000 respectively. This means the Nissan Cefiro 2.0 now costs just $83,000 with COE, $7,500 less than it did two months ago. In comparison, the Cat B COE fell by
only $5,100 over the same period.

Honda, the other big Japanese player, lowered most of its Cat B model prices by $2,000 to $3,000. Its distributor Kah Motor is taking a different tact with the soon-to-be-launched Civic, though. Instead of cutting prices (and risk angering customers who already booked the car but have not yet taken delivery), it increased the COE rebate from $9,000 to $12,000. This means that buyers stand to get rebates of almost $3,000 if the Cat B COE
holds steady in the next round of bidding.

There’s evidence of some creative selling among other car brands, too. Subaru’s Cat B cars cost the same as before but distributor Motor Image Enterprises is offering cash discounts of between $2,000 and $3,000 to customers as part of a ‘Christmas promotion’. Cycle & Carriage Kia has reverted to a tactic it used when COE prices last crashed – advertise its Cat B Kia models with prices excluding COE. “The Cat B COE is quite unpredictable so we believe that allowing customers to decide how much they want to bid for their COEs is a fair and transparent
system,” a C&C manager told CarBuyer.

Several people CarBuyer spoke to said the lower Cat B COE prices might change their mind about buying a car with a larger engine, but not everyone is rushing to buy a car straight away. “I think the COE might drop even lower since the festive season is around the corner and people will have other things on their mind besides buying cars,” commented homemaker Laura Yeo, who is thinking about replacing her four-year old Mazda Premacy.

What all this means is that if you’re in the market for a new car, it may be worth trying to bid for a COE on your own. If other buyers play the wait-and-see game over the next couple of weeks and demand doesn’t rise, a
cheap COE could be yours for the taking.

HOW THEY HAVE FALLEN: CAR PRICES TAKE A PLUNGE

Model Dec 21 Dec 22 Comments
Honda Civic 1.8 $72,000 $72,000 COE rebate increased to $12,000
Hyundai Tucson 2.0 (A) $66,000 $64,000 Extra $2,000 off, conditions apply
Kia Magentis 2.0 (A) $53,499 $41,999 New price excludes COE
Mitsubishi Grandis 2.4 (A) $83,988 $80,988 Straight $3,000 price drop
Nissan Murano 2.5 (A) $109,500 $105,500 Straight $4,000 price drop
Subaru Legacy 2.0 R (A) $87,000 $87,000 $3,000 cash discount given