Buying a car online? Here’s one thing you need to look out for



COVID-19 means online deals abound in Singapore are sprouting up everywhere, but here’s what buyers really need to look out for 


SINGAPORE

With the COVID-19 pandemic come the circuit breaker (CB) measures, and with the CB has come a horde of online sales and promotions from car dealerships here.

But there is one thing of chief importance that car buyers should be aware of before signing the dotted line: the Certificate of Entitlement (COE). 

Wait, what’s this about crazy car sale season…isn’t everyone at home?


Yes and also bored out of their skull, or they simply can’t go out, thus swamping delivery services with online purchases, thanks in part to plenty of promotions on the internet. 

It’s the same with cars: The past few weeks have been a silly season for online car promos. 

Nice prices in flash sales are tempting, but car buyers should keep one factor in mind

This past month saw Lexus having a regular sale and an auction sale, Toyota also had both types of sales, and in fact its auction sale is now happening and ends on May 18. It also had a demo car sale on Lazada. Until the end of the CB period, Honda has a name-your-COE promo, while VW and Skoda both have sales running.

Now there are surely big discounts to be had here, with up to S$20k off some cars for example, but there is one variable which makes buying a car here extra difficult and which could eliminate your bargain entirely: The Certificate of Entitlement (COE). 

Why do we need to watch out for the COE?

First, let’s explain car buying online in the current state of things.

Right now if you ‘buy’ a car at one of these sales, you’re simply chope-ing the car with a deposit (typically S$500). 

Under the circuit breaker measures, nobody can deliver cars to you, so you’ll have to wait for June 1, 2020, or later to receive your vehicle. But before a dealer can do that, they need to register the car with a COE first. 

So why do we need to be careful of COEs? 

You always do, even without COVID-19 messing shit up.

Because COEs are bid for twice a month (every first and third Monday-Wednesday), they are subject to price fluctuations twice a month.

In normal times, this wouldn’t be so much of a concern – COEs have not fluctuated tremendously in the past 12 months or so, in fact they’ve been very stable despite the COE quota becoming smaller.

But as you’re tired of hearing by now, we’re in unprecedented times and it’s even more difficult to predict what’s going to happen. 

We said as much in our COE analysis story in April, and while that was written before the lockdown was extended until June 1, 2020, it also means more time for dealers to score orders. But they can’t fulfill them until after June 1, and in fact we don’t even know when exactly: the LTA hasn’t even announced when COE bidding will resume, exactly.  

Dealers might have a stock of Open Cat COEs (Cat E) to fill some orders readily, but they won’t be many. Meanwhile if, to bid for a COE in your name the dealer has to actually have a signed agreement with you for a car purchase. 



With two whole months and crazy promos going on, that means a big backlog, and possibly, a COE price spike in June. 

In fact, Honda’s sale is predicated on the idea of letting customers predict the COE, which is pretty clever since it highlights the COE mechanism quite clearly to the buyer – that’s pretty much it saying, “Look we have no idea how COEs will pan out. Why don’t you give it a guess?”

What should I look out for, specifically?

Read the fine print with regards to COEs, because with promotions and discounts come more T&Cs of course.

What you should ask is:

1. At what COE price level is the total car package price (car + COE price) stated?

2. If the COE price goes up beyond the above level, do you have to pay extra?

In other words, you have to make sure your discount is really a discount, because it could be eventually offset by a COE price jump.

How can I get the best deal, then?


If you’re able to, get a guaranteed COE package.

That usually costs a little more, but what it means is that you’re guaranteed to get a car at the price you paid. For a BMW from Performance Motors Limited, it’s a S$5,000 premium, while at Mazda Eurokars it’s S$3,000, for example. Another example, the Lexus Assurance package (a S$1k top up), includes a guaranteed COE as part of its benefits.

A non-guaranteed COE package means the dealer will try to get a COE for you at the total package price agreed on (usually for six bids) but if that doesn’t go through, both parties get to walk away from the deal. Either that, or you’ll have to top-up the difference to clinch that COE. 

What is going to happen in June? 

Again, we don’t know. No, we really don’t, if we did we’d make tonnes of cash out of COE prediction and not be motoring writers. 

But seriously, it doesn’t help that the Land Transport Authority (LTA) hasn’t said how the COEs from April and May are going to be re-distributed. Our guess is, it’ll be divided up amongst the remaining months of the year,  to minimise fluctuations, and also because low COE prices are not a good outcome for the health of the collection box. 

And on the other side of the fence, car dealerships are run by people who know which side their bread is buttered on, and they certainly don’t want COE prices to go up, nor have to call up customers with the dreaded request to top up their bid. 

As ever, a jump in COE prices would mean slimmer margins for dealers, while a slump would indicate that sales across the industry have been dismal, in spite of the effort to shift them online. Either way, the motor traders would be screwed. Pandemic or not, some things never seem to change.


about the author

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Derryn Wong
CarBuyer's chief editor has a keen interest in all things mechanical, technological, animal and mineral. He's particularly fascinated by eco-cars and cars which make no logical sense. An avid motorcyclist and photographer, he also enjoys cats.