Why COE prices dipped in early September, and the ‘scary’ reason Singapore’s COE prices won’t be going down for the rest of year 2017

SINGAPORE – Certificate of Entitlement (COE) prices have had a weird time of it in 2018. Though they’ve generally been on a downward trend this entire year, they’ve also hit recent lows in September’s first round of COE bidding.

Take Category A as a prime example: It hit a 2017 high in April, peaking at $52,000 in April’s first round, but dipped all the way to $36,001 in the beginning of September. In the latest round, September’s second, it rose back up to $42,902.

Category B, for ‘premium’ cars, or those with engines of a capacity larger than 1.6-litres, or making more than 130hp, saw a similar trend, though it wasn’t an exact shadow of Cat A. It peaked at $55,414 in May, reached an annual low in $47,501 in June’s second round. September was much more stable for B though, it only going from $49,000 to $49,189.

As typical of Category E, the open category that can be used to register any vehicle type, it shadowed the money, i.e. Category B, reaching its highs and lows on the same time frame (high of $55,000 in May’s first round, low of $48,001 in June’s second round), while September saw a blip of $48,005 rising to $49,012.

Compared to the nightmares of the recent past, that sounds like good news, but it’s a positive trend for buyers that may not last.

But first, let’s explain just what happened with September’s Category A extremes.

As mentioned, Category B is the ‘premium’ category – inverted commas because that’s not strictly true, since you can’t say a car is ‘premium’ just because it has a certain capacity or arbitrary power figure above 130hp.

Disclaimer aside, Category A is still the ‘mainstream’ category (commas for the same reasons) and as such, is more price sensitive. On the face of it, there seems no good reason for Category A to plunge suddenly, but what sales managers tell us is that buyers were holding back because of the Hungry Ghost Month.

Cue Stevie Wonder’s ‘Superstition’, but one can’t deny that it’s something which changes buying behaviour.

Personally I’m more afraid of flying ash and soot, but that leads us to another reasons to do with scary air: Euro VI standards. They came into effect on September 1, 2017 and with them, a number of less-expensive, less-technically-accomplished cars that didn’t meet the standards were dropped from local price lists. These included the Mitsubishi Lancer, the Honda Mobilio, Nissan Sylphy and Toyota Vios.

Even larger cars like the Honda Accord and Toyota Camry have fallen due to Euro VI rules

The absence of these bread-and-water models from pricelists was probably enough to induce the COE price drop – but naturally everyone ignored the principle of the COE system that the COE price you see now isn’t the COE price you’ll get and so Cat A went back up to where it was.

On the horizon there’s another reason why COE prices will remain as they are, and again it’s to do with the quality of the air: Come 2018, the Vehicular Emissions Scheme (VES) will be in force, and it’s very likely prices of cars across the board will go up, due to the stricter requirements.

Some models that are keenly priced now might be slapped with a big penalty next year, so it’s very likely we’ll see a big shakeup in terms of model sales in all segments. In fact, some projections say that VES will hurt mass market buyers far more than luxury ones.  

In the meantime, there’s still the final quarter of 2017 for carbuyers, and sellers, to beat the incoming VES penalties.

So if you’re looking for a bargain, now’s the time. Sales managers CarBuyer spoke to say retailers will be rolling out attractive discounts on some models that may not do so well in 2018 and that means demand for cars, and thus COE prices, is likely to remain buoyant for the rest of 2017.

More expensive cars is another reason to groan of course, but at least it’s with good cause – Singapore’s air pollution is worse than you think and in some parameters, exceeds the World Health Organisation’s recommended standards considerably.