Revised VES announcement and year-end rush result in the highest COE prices of 2020
That was fast. If you read our recent news about the revised Vehicular Emissions Scheme (VES) possibly cars cheaper by S$5k in 2021, that’s already evaporated.
It’s not even the end of 2020 and COE prices have already increased by S$4,714 since the VES changes were unveiled. The updated VES schedule for 2021 would have meant some cars become S$5,000 less expensive next year, assuming all other things remaining the same.
The last bit is the killer though, because in Singapore car-buying doesn’t remain the same, it changes every two weeks thanks to the Certificate of Entitlement (COE) quota system.
In December’s first round of COE bidding for Category A, ‘mainstream’ cars with engines up to 1.6-litres in capacity and with less than 130hp, the price increased to S$40,714 from S$37,360, the latter in November’s second round.
Significantly, that’s both the highest price jump we’ve seen all year, S$3,024, as well as the Category’s highest price for 2020 to date.
Category B, for ‘luxury’ cars with engines more than 1.6-litres in capacity or with more than 130hp, rose from S$41,101 to S$45,012. That was a rise of S$3,911, and it’s not the category’s highest price rise, which belongs to the S$5,877 leap between March’s second round and July’s first round because of the circuit breaker. But again, it’s the highest we’ve seen the Category B COE reach this year, to date.
But Category E, the open category which can be used for any motor vehicle but is usually reserved for Category B cars since that’s where the money is, mirrored Cat A. Its S$4,007 price rise was again the highest jump for the year, as well as ending up with the highest price, S$45,510.
2020’s been a nutty year, and more so given that the fourth quarter of a normal year typically sees the motor industry winding down with many Singaporeans heading abroad for the holidays and doing anything but car shopping. This year it’s the inverse, and even more so because nobody can turn down a good deal.
You can’t have missed it, with local consumers being bombarded monthly, if not weekly, by 10-10, 11-11, 12-12 sale mania, and this has spread to the car industry as well. Not surprising, since car dealers are frantically trying to make up for a missing April-May-June.
Besides that, the VES 2021 update has supercharged efforts to sell cars. Since the cars become cheaper in 2021, the scuttlebutt is that brands with cars who benefit – again see the story for reference – gain a small S$5k advantage in pricing, which can be translated as discounts to entice buyers. That works because once a COE is obtained, you only need to register the car within six months.
Additionally, a dealer can also use Category E certs to make up the numbers. They’re the most expensive now because they can be held in reserve to be tactically used when it’s most beneficial. Such as when COE prices go up above say, S$50,000, which is very possible in 2021.
What about the last round of the year, whose results we will see on Wednesday? It’s almost certainly going to see another rise due to the factors just mentioned.
In times of peace (see the past two years) it’s been very hard to predict how the COE will go, per round, but this time sadly it’s quite clear: The current era of sub-$35k COEs is over.