By Leow Ju-Len

GOOD NEWS FOR car buyers: COEs are down again. The market for Certificates Of Entitlement took a dip this week, and cars have gotten cheaper by thousands as a result.

After this week’s COE auction, the Category A certificate (for cars up to 1.6 litres, and taxis) ended up at $14,590, a $1,111 fall from two weeks ago.

Over at the Category B (for cars above 1.6 litres) corner of the market, the closing premium was down a steep $2,473, at $14,640.

Only the Open certificate (Category E, which can be used to register any type of vehicle but is exclusively used for cars) showed any kind of resilience, closing Wednesday’s bid at $16,301, dipping just $399 in the process.

This week’s fall comes on the back of a sharp rebound at the end of May. After the market dipping sharply early in the month, buyers were prompted into action and some car dealers reported 20 to 30 percent better business, which made prices rally two weeks ago.

However, the car market has clearly lost steam since then.

A big rush of buyers tends to push COE prices up, and carry with it some momentum to keep them aloft for a while.

That’s because there are only so many COEs out there, so whenever there’s a rush of buyers, some inevitably fail to win a certificate (or the dealer fails to secure it for them), and they have to try again in a subsequent auction. This tends to keep prices strong for a while, as the system flushes these repeat bidders through.

But it now seems as if things have really quietened down. Two weeks ago, 2,824 competed for 2,063 Category A COEs, which means that nominally, 761 of them will have had to try their luck again this week.

However, we saw just 2,500 bids for a Cat A certificate on Wednesday, which suggests that the industry had relatively few ‘fresh bids’, or bids from new customers, in hand.

Things are perhaps more surprising in the Category B segment. We haven’t seen a large car COE cheaper than $15,000 since early February, and yet there hasn’t been a shortage of new models for buyers to think about.

The new Audi A4, BMW 1 Series and the ‘official’ Toyota Wish from authorised distributor Borneo Motors have all made a recent debut, while fresh stocks of the Honda Accord have arrived.

Ordinarily, that would never have led to a 14.5 percent fall in Cat B prices. Maybe the market hasn’t responded to these new cars quite as some dealers will have hoped. We hear, for example, that of all the new 1 Series models, only the 120i Convertible is selling decently.

Whatever the case, it’s clear that mid-May’s rush has been replaced by early June’s hush.

One thing worth noting is that, after covering the COE market for over 100 issues, we’ve learnt that whenever car dealers call up and ask us, “How is the rest of the market doing?”, it’s a sure sign that they are finding things quiet in their own showrooms. And lately, they’ve been asking us that a lot.

Category A – CAR (1600cc AND BELOW) AND TAXI: $14,590

DOWN $1,111

52-week high: $17,999
52-week low: $8,118
Quota: 2,038
Bids: 2,500

IT’S CLEAR WHY COEs are down: demand is soft. But observing the industry’s reaction to it is a good way of sussing out what it expects to happen. Market leader Borneo Motors has held prices steady on the Toyota Yaris, for instance, and dropped prices on its other Cat A models by just $1,000.

That sort of under-reaction to the $1,111 fall in COEs tells us that the company’s managers expect the market rise a little in two weeks’ time, or at least hold steady. Still, if car buyers want to see how much lower the market will go, and hold back their buying for the moment, their subsequent inaction might soften the market even more.

Category B – CAR (ABOVE 1600cc): $14,640

DOWN $2,473

52-week high: $19,802
52-week low: $13,114
Quota: 1,125
Bids: 1,282

HONDA ACCORD BUYERS will be happy. Thanks to COE rebate levels of between $17,000 and $18,000, they will have pocketed $2,360 to $3,360 in cash, given this certificate’s fall to $14,640. Dealers, no matter what they say, aren’t usually happy to return money to customers, so it’s fair to say that they didn’t see this large a drop coming. Perhaps this will stir up the market, just as an $11,009 Cat A COE did in early May. If nothing else, it should narrow the price gap between some Cat A and B models, like the Honda Civic 1.6 and 1.8, if enough people are prompted to make the switch, prices should get a lift.

Category E – OPEN: $16,301

DOWN $399

52-week high: $19,510
52-week low: $13,301
Quota: 882
Bids: 1,221

IT WAS FAIRLY surprising to see a pretty steep fall in Category B, while the Open Certificate more or less traded sideways. It might well be that the new car launches mentioned above have necessitated buying up lots of these certificates, which are unique in being transferable. They alone can be used to register cars for ‘immediate delivery’, satisfying early-bird buyers who have a want-it-now lust for, say, their spanking new Audi A4.

It’ll be interesting to see how buyers take to paying for an Open COE, though, given that its rebate value is pegged to whatever category of car it’s used for. The gap between this price and that of the other certificates will mean that buyers will have had to pay extra for immediate registration, only to wind up with a COE rebate pegged to either $14,590 or $14,640.