By Derryn Wong

PRICES ARE UP yet again, and this time round everybody saw it coming,

But there’s a little more to it than that.

Category A Certificates of Entitlement (COE) for cars 1,600cc and below, along with taxis, saw the smallest price jump.

It went up by $1,411, from $12,899 in June’s last round of bidding to $14,310. Category B, for cars above 1,600cc in capacity, saw a larger jump from $14,840 three weeks ago to rest at $16,801 - a difference of $1,961.

Category E, open COEs, which can be used to register any motorised vehicle, saw the biggest leap in cost from $15,100 up to $17,501 – a bump of some $2,401.

It fits the pattern we’ve been seeing since earlier this year and the expected behaviour of the market to boot. That is, increase, increase and more increases.

Consider this: COEs have been on the rise in every round of bidding since February, which adds up to nine consecutive rounds of price increases. After February’s first bidding, Cat A was at $1,020, Cat B at $689 and Cat E a measly $3,000.

Barely half a year on the combined effects of the COE quota cut and resurgent demand thanks to unbeatable bargains and new models has seen COE prices increase (in Cat A’s case) by fourteen times. Recession? What recession?

At least this time round the price jumps were expected: because COE bidding starts on the first and third Monday of each month, there’s usually a two week break in between. Some months have five Mondays though, leading to a three-week break instead.

For car dealers this is an extra weekend to pick up orders and accumulate a backlog.

Back in June-July 2008 there was one such break, and the biggest price jump was $812, in Cat B.

At that time prices were hovering around the $15,000 mark and the industry expected a bigger jump, but sales were curbed by rising fuel prices and, though we didn’t know it at the time, inflation and an oncoming recession.

This time round, it’s most likely that the price jumps were a result of the three-week break’s effect, rather than resurgent overall demand. In fact, this month might well see the end of the sales momentum the industry seems to have gathered up to this point.

What makes us think so? While in the end prices did spike, the number of bids received for COEs dropped across the board.

Category E COEs are a premium class: being fully transferable, they are often used to speculate and for those who can’t wait (and have the money) to get their car. But doesn’t this suggest that the way Cat E’s prices jumped the most is a sign of a recovering market and that COE prices will continue to climb? Not necessarily.

A French brand’s sales manager pointed out the enormous $4,273 increase in Cat C (commercial vehicle) COEs to us.

”There’s been an overflow from the commercial vehicle sector,” he said. ”If contractors have big projects they need to finish and can afford it, they’ll take Open COEs since time is money to them.”

And the stabilisation of COEs at their current levels isn’t all that bad either.

”It’s true that we’ve seen a slight sales slump for some of our smaller models,” a sales manager for a Korean brand told us, ‘‘but I believe COEs should hover around this region and I’ll be happy if they do.”

That seems a strange wish to make for someone in the business of selling Korean cars, considering that fewer people tend buy budget cars as COE prices go northward – if COE prices were $100,000, nobody would pay $140,000 for a Proton, for example.

He went on to explain, though. ”Frankly, having price fluctuations like we’ve experienced so far is hell for us. Customers who want to buy simply wait and see what the COEs will do. If it hovers around the $15,000 mark, people will see that there’s no change and they’ll buy,” he said. ”It will also help bolster sales against the used car market too.”

There is, however, one reason to expect another slight increase in prices next round. A major car sale carnival this weekend was also on the mind of management CarBuyer spoke to, as the congregation of sellers leads to great bargains for buyers – and more orders.

”We’ll be giving some good discounts,” said the Korean brand manager. ”If the COE prices go up then you’ll know they worked!”

Category A – CAR (1600cc AND BELOW) AND TAXI: $14,310
UP $1,411
52-week high: 14,685
52-week low: $2
Quota: 1,405
Bids: 1,655

AS CAR PRICES rise, it’s the cheaper end of the market that suffers and it certainly does show through this round. Cat A prices rose the least amongst the categories and the number of bids dropped as well, from 1,735 last round to 1,655.

The bid ratio (number of received bids to the quota) fell from 1.23 to 1.18. Higher car prices must be giving dealers greater margins to bid with.

Category B – CAR (ABOVE 1600cc): $16,801
UP $1,961
52-week high: $16,801
52-week low: $200
Quota: 780
Bids: 1,052

JUMPS IN THIS category are a good indicator that buyers still have spending power, and maybe even that the bad times are coming to an end, it’ll be found here in Cat B. It increased more than Cat A, although the bid ratio fell by the same percentage as Cat A, from 1.40 before to 1.35.

Lexus’ IS-C was launched on June 30 and has done well for a luxury convertible, selling about 70 units thus far. It could be a factor in the extra bump.

Category E – OPEN: $17,501
UP $2,401
52-week high: $17,501
52-week low: $3,000
Quota: 720
Bids: 1,278

A BUMP IN Open Category COEs heralds boom times, as it’s here where speculators buy COEs, hoping to sell them for a profit later on (Cat E contains transferable COEs).

This time it looks like an overflow from construction and commercial vehicles fed demand – off our charts, Cat C (Goods Vehicles and Buses) had a whopping $4,273 increase. No one would rule out some Cat B spillover, either.