By Derryn Wong

TRADITIONAL WISDOM HOLDS that COEs tend to fall in and around the period of Chinese New Year. This isn’t always true, as traditional wisdom also holds that you’re supposed to stay up late and live a long life too, scientific studies say that people who work on the night shift die earlier.

The Lunar New Year changes each Gregorian year because of the Lunar Calendar and while its true that most showrooms are closed on the CNY weekend, since only a small number don’t have people to visit and cars to buy then (many Chinese customers would have made their purchase earlier in hopes of getting a new car to go visiting with), business is usually slow.

Each year brings different circumstances, though, let’s take a look through history with Category A (Cars 1,600cc below, and taxis) as our example:

2007 Feb 18 CNY
February 2nd round (week of Feb 13) - $5,200
March 1st round (week of March 7) - $12,602
Difference = $7,402
3 week break

2008 – Feb 7 CNY
Feb 1st round (week of Feb 5) - $12,002
Feb 2nd round (week of Feb 20) - $12,856
Difference = $854
Two-day bidding period, compared to usual three-day

2009 – January 26 -27 CNY
January 2nd round (week of Jan 21) - $2,693
Feb 1st round (week of Feb 4)- $1,020
Difference = -$1,673

2009 was something of a freak year – if you remember, late 2008 saw the rumblings of the impending economic disaster, while around early 2009 the grip of the recession was tightening and the ensuing drop in demand meant the bottom fell out of the market.

This time round, what happened looks a lot like 2007 and 2008, luckily, with the CNY seeing a boost to prices all round, thanks to the three-week break (which means dealers had more time to canvass sales) and the previous round’s buyer-friendly COE price drop.

In fact some market watchers anticipated a greater price increase, since CNY didn’t disrupt buying that much, only taking one weekend out of the equation, leaving dealers two regular weekends to get orders as per normal.

What could explain why even more sales (and thus higher COE price jumps) failed to materialise is not post-CNY blues, but pre-CNY activity. As early as mid-January, dealers (especially those active in Category A) were offering large discounts to entice buyers wanting a new car to go visiting with. Toyota dealer Borneo Motors for instance, was offering up to $6,000 off some models.

Hyundai and Mazda reported good sales thanks to their own promos – but it is equally possible that all those looking to take advantage of these discounts had already done so before the CNY period, or had their buying carried forward, in other words.

In January, COEs already hit five-year highs and this round, those figures have been trumped. Could they go even higher? Some industry figures certainly think so.

“This year, the government says the economy is getting better and a large pool of cars from 2004-05 are reaching prime time to be changed,” said Vincent Ng, product manager for Honda dealer Kah Motors.

Taking this with the anticipated COE quota cuts from the LTA means things look set to climb.

Category A – CAR (1600cc AND BELOW) AND TAXI: $20,340
UP $351
52-week high: $20,501
52-week low: $4,460
Quota: 1,148
Bids: 1,493

In a mirror of when the CNY discounts first appeared, demand went up and COE prices did too, accordingly. The number of bids went up from 1,326 to 1,493 and more buyers were unable to secure a COE compared to the previous round: 345 bids were unsuccessful, roughly 23 percent of the total bids, versus last round’s 13 percent.

Category B – CAR (ABOVE 1600cc): $23,889
UP $709
52-week high: $23,889
52-week low: $4,889
Quota: 685
Bids: 956

It’s business as usual in Category B – while there were less discounts than cheaper cars from Cat A, there were still deals to be had, with Cycle & Carriage offering generous bonuses on Mercedes-Benz cars for example. It’d be a safe bet to say that Cat B certainly contributed to the big jump in Category E, since 298 out of 956 bids (or 31 percent) were unsuccessful.

Category E – OPEN: $24,229
UP $1,828
52-week high: $24,229
52-week low: $5,700
Quota: 590
Bids: 1,255

Category E COEs can be used to register anything on wheels and like we’ve seen often recently, the big increase is attributable to Category B and Category C (commercial vehicles) spill over. The latter saw a huge $2,111 jump and given there are just 173 COEs for Cat C to be had, little stimulus is needed for it to affect open COE prices. Another thing to note is with the recession fading and property markets booming, speculators could be returning to this category, as open COEs are transferrable (by individuals, not companies) and have a three-month validity.