COE Quota Analysis May 2015: Don’t Buy Til July



 

 

Singapore –  The Certificate of Entitlement (COE) quota for passenger cars continues its upward trajectory with the latest COE quota announcement figures for  for May to July 2015, from the Land Transport Authority (LTA).  

Category A (for passenger cars with an engine displacement of 1.6-litres or less, and making less than 130bhp), commonly perceived as the ‘mass market’ category, saw the greatest increase: 2,853 pieces per month, up from 1,973 units per month in the previous February to April time period, or an increase of 46 percent.

Keep in mind that the monthly quota was less than half of the new one back in November 2014 – January 2015, with only 1,396 units per month.

Category B, for cars above 1.6-litres and/or 130bhp, also saw a sizeable increase in monthly quota from 1,138 to 1,444 (27 percent), while Category E, the Open category, increased from 527 to 349 per month.

Quota increases are mainly the result of increased de-registrations as a large proportion of the passenger car population here is reaching 10-years of age.

Motorcycles, or Category D, received a much-needed boost as well after recently hitting record highs, going from 570 to 653 units per month. It won’t bring prices down by much, but it’s better than nothing and here’s why high motorcycle COE prices affect all of us.

But as we pointed out with our analysis piece in December , that doesn’t automatically mean COE prices will dip below $60,000.  In fact, COE prices for cars are undergoing something of a spike with back to back price increases in the last two rounds of bidding.

And there’s another fly in the pudding this time too: New, stricter regulations on emissions that come into effect on July 1, means many cars that are currently in the neutral or lower end of the rebate bands for CEVS may receive penalties.

The neutral band, B, now encompasses 136 to 185 g/km of CO2, which in the past used to be the province of A4 (141-160g/km, $5,000) and A3 (121-140g/km, $10,000) rebate bands.

“A lot of our cars fall into the neutral band or have a slight rebate and there is now a pressure to register before the new CEVS kick in on July 1, “ says the sales manager of an East Asian brand CarBuyer spoke to. “After that, prices will go up by $5,000 at least. And in the less expensive side of the market that we occupy, that’s crucial for buyers who need to borrow the maximum 50 percent.”

The LTA claims its Cat A tweaks have lowered car prices somewhat, but that means little with such strong demand and extra pressures on buying. Our prediction? After July, and assuming the LTA continues its policy of not regulating COE supply responsibly, COE prices will be able to reflect the ‘true’ status of the market.

about the author

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Derryn Wong
Has a keen interest in all things mechanical, technological, animal and mineral. Is particularly fascinated by eco-cars and cars which make no logical sense. An avid motorcyclist and photographer, he also enjoys cats.