If you were looking for a nCOV-induced lower Certificate of Entitlement (COE) in Singapore, you’ve already missed the boat but there is a silver lining

SINGAPORE 

Here’s a great example of how correct actions can very clearly help to stabilise a situation.

When the news of the novel coronavirus landing in Singapore broke one of my first thoughts was : Car sales are going to take a huge dip, and perhaps take Certificate of Entitlement (COE) prices along with them. 

Car dealers we spoke to indicated that in the early stages of the nCOV2019 virus presence in Singapore, showrooms turned to ghost towns, and that was evidence enough for us – you can’t buy a car without being at the showroom to sign the dotted line.  Well, you can, but it’s not popular.

In fact the high water mark of the situation was the entire DORSCON Orange-induced toilet paper frenzy (Friday, February 7), which was right after February’s first round of COE bidding ended on Wednesday, February 5. 

We expected COE prices to dip right after, although the effect of nCOV had already been seen in the S$5,000 drop of Category A (for cars with an engine capacity of less than 1.6-litres and with less than 130hp), from January’s second round to February’s first round, S$35,010 to S$30,010. Category B saw an even larger drop, roughly S$7,000, from S$37,705 down to S$30,890. 

With the cases of nCOV not quite abating for the rest of February, we expected COE prices to take a similar trajectory for the rest of the month. But one of the reasons we enjoy writing about COEs is that we’re often proven wrong – prices rose around S$2,000 for both Category A and B in February’s second round – Cat A from S$30,010 to S$32,999, and Cat B from S$30,890 to S$32,889. 

Perhaps that’s because some had the same hunch we had – nobody in showrooms means nobody’s buying, which means a COE bargain is there to be had. It’s good to know, in hindsight, that the virus might make Singaporeans go berserk on toilet paper and avoid crowded places, but bargains can still lure them out to sign the line. 

Between February and March though, the considerable price drop hasn’t returned, and things have very much stabilised, with the price for both Cat A and B dropping a few hundred dollars in that time period, which brings us to another interesting point. 

With Cat A, the supposed ‘mainstream car COE’ now S$32,699, and Cat B now at S$32,801, there is now effectively no price difference – COE wise – between a mainstream and luxury car. 

That wasn’t the case last year, as late as November 2019 the price gulf between the two was around S$10,000, but for all of 2020, the price difference has been less than S$2,000. 

Why? Our inkling is it’s because the quota for Cat A has shrunken to basically the same as Cat B – around 980 units per COE bidding round for both COE types. In July last year, the price difference was more than S$10k, but the quota for A was 1,400 per round, and B was 1,140 per round, in contrast. In other words, Cat A prices might actually be lower – it’s just that the supply of cars (COEs, essentially) is the limiting factor here. 

At least this time the COE system lets us be proven right: CarBuyer wrote back in 2014 after the 130hp power cap was introduced that the Category system was already broken.