By Leow Ju-Len

AFTER DIPPING TO low levels not seen since the early part of this year, prices for COEs (or Certificates Of Entitlement) crept up this week on slightly stronger buying activity.

The certificate for cars up to 1.6 litres and taxis (Category A) climbed $788 to $13,289, while the certificate for cars above 1.6 litres (Category B) rose more sharply, gaining $1,001 to close at $13,890.

Only the Open Category COE (for anything on wheels, but usually applied exclusively to cars) fell this week, dipping just $100 to $14,001.

The interesting thing is, in spite of the higher prices car dealers from every segment of the market have at some time or another this month remarked to us how slow the market has been.

“Look,” a salesman from Mini told CarBuyer, pointing at the Renault showroom across the road. “It’s so quiet here we could play badminton across Leng Kee Road. And that’s on a Saturday!”

So how come COEs have gotten more expensive?

“I think it’s a knee-jerk reaction from the the last round,” says a sales manager for a French marque we spoke to.

Given that COEs fell so dramatically earlier in the month, with car prices following them south, the feeling is that bargain hunters were bound to emerge.

“Everyone dropped their price and people did come out to buy,” says the sales manager. “On our side, it wasn’t fantastic but it was slightly better than the round before. It was still slow, yes, but a bit better.”

In that sense, it’s nice to see the COE market working as it’s expected to do – when COEs get expensive enough to price people out of the market, that eventually eases demand and causes prices to fall. Which, of course, eventually brings more buyers back into the market.

The crude effectiveness of the system aside, perhaps the lesson here is that there will always be car buyers in Singapore, and more of them than COEs in any given fortnight (or else the prized certificates would cost $1 each), so the trick is identifying what kind of buyer is doing the shopping.

And while cars are essentially a luxury good in Singapore, the people buying now seem to be the ones who are trying to do it as sensibly as they can.

“I think upgrading is not too much of an option at the moment,” says a sales manager, of the current crop of customers he sees. People seem to be buying new cars to replace old ones, without making the leap to a larger or pricier model in the next class up.

So don’t expect someone to trade a Honda Civic in for an Accord, but convincing someone to make a Civic-to-Civic swap is certainly doable.

Another potential buyer is the one who can get out of his existing car loan without coming up with too much cash. If getting into a new car doesn’t involve any financial pain (say, no big outflow of cash to settle an outstanding loan, and no big increase in monthly payments), there’s a good chance the person will sign on the dotted line.

The main thing is, there is a mood of caution in the air at the moment, so if would-be customers don’t feel the need to change cars, they won’t unless they have a good reason to. And low COEs like we had in early August are always a good prompter.

Otherwise, the gloomy outlook for the motor trade looks set to continue, with general belt-tightening going on. Plenty of time for salesmen to improve those badminton skills, then.

Category A – CAR (1600cc AND BELOW) AND TAXI: $13,289

UP $788

52-week high: $17,999
52-week low: $8,118
Quota: 2,036
Bids: 2,318

MORE BIDS MEANS higher prices, usually, and so it was this week. With 2,318 people trying to win a Category A COE this week (compared to 2,267 a fortnight ago), prices were bound to rise at least a little.

What’s more perplexing is what happens from here. If early August flushed out an unusually rich crop of buyers, the next few weeks could be especially quiet without them around. On the other hand, buying could pick up in anticipation of a tighter supply of COEs in October, when the LTA is set to adjust the COE Quota.

What do dealers think? Honda dropped prices, Toyota upped prices and Subaru held them steady. It seems to be anyone’s guess at this point.

Category B – CAR (ABOVE 1600cc): $13,890

UP $1001

52-week high: $19,802
52-week low: $12,889
Quota: 1,099
Bids: 1,362

SINGAPOREANS CAN’T RESIST a bargain, perceived or otherwise. So it should be no surprise that this COE rebounded, since Cat B dropped to its lowest price in 52 weeks a fortnight ago. That will have perked up buyers, who will have tried to take advantage of any resultant price-cut. Those buyers will be doubly happy now, of course, and should be busy congratulating themselves for booking a car before this week’s price increase.

This brings to mind that Singapore car buyers sometimes not only have a new set of wheels to make them feel proud, but that many also get to brag to neighbours about what a good deal they got. Something for salesmen to think about in their pitch? “Sir, if you buy now everyone will see how smart you are…”

Category E – OPEN: $14,001

DOWN $100

52-week high: $19,510
52-week low: $13,301
Quota: 883
Bids: 1,318

WHY DID CATEOGRY E move in the opposite direction to the other COEs, price-wise? Open Category COEs are something of a special case, since they are transferable (and can thus be stockpiled and deployed as and when necessary) and because their value is later pegged to whatever Category of COE they are used in proxy of. Use an Open Certificate to register a motorcycle, for example, and your scrap rebate is later calculated from the $1,318 that a bike COE cost this week.

The implication is that when prices between Cat E and A or B are wide, the Open certificate becomes something of a liability. Two weeks ago, while a Cat A COE cost $12,501 an Open cert went for $14,101, and who in their right mind will have wanted to pay $1,600 extra for one? That might have burnt a few speculative fingers, resulting in a much narrower gap between this COE and the others this time around.