COE prices edged ever closer to the mythical 100 grand barrier in the latest exercise, and it’s only a matter of time before we see a historic breakthrough

SINGAPORE

The first Certificate of Entitlement (COE) bidding exercise for March 2022 saw premiums rise across the board once more, with the larger Cat B and Open categories now firmly ensconced well into the 90 grand range, and Cat A rising rapidly in tandem as well.

In Category A, for ‘mainstream’ cars with engines less than 1.6-litres in capacity and output of less than 130hp, prices went up by S$5,501, to end at S$68,501. It marks a remarkable rise in just a couple of months, with Cat A premiums having gone up by over S$10,000 since the start of January.

Category B meanwhile, for cars with engines that make more than 130hp, or are above 1.6-litres in capacity, saw a slightly smaller rise, with prices going up by S$1,299 to end at S$94,989. It doesn’t quite paint the full picture though, as Cat B saw its own huge jump at the end of February, rising by around S$7,500 to break past the 90 grand barrier for the first time this year.

The headline figure is in Category E however, which is open to all vehicles except motorcycles, but usually ends up being used for big cars. Premiums in this category went up by S$5,788 to end at S$98,870, the highest in almost a decade, and perilously close to the magical 100 grand barrier.

While rising COE premiums in the wake of a reduced quota allocation is to be expected, the rate at which it has gone up has surprised many in the industry. Observers noted that showroom traffic has been quiet in recent weeks, so the seemingly rampant demand does not quite tally with actual on-the-ground sentiment.

One possibility for the sharp rise in the Open category could be the rush in registering higher end cars, which were slapped with additional duties following Finance Minister Lawrence Wong’s Budget announcement in February. Effectively, cars with an Open Market Value (OMV) above S$80,000 would be charged with a 220 percent Additional Registration Fee (ARF) rate for any value above that threshold. 

As Open category COEs are transferable and have a validity of three months, speculators suggest that buyers of such cars would have been trading older Open COEs that were significantly lower in order to get their cars registered before the tax deadline kicked in, spurring dealers to bid for even more Open COEs to replenish their supply.

But while Cat E, and perhaps by some extension Cat B, continue to grab the headlines by sailing close to the magical 100 grand landmark, the trend to watch in the months ahead could actually be Cat A. The Land Transport Authority (LTA) announced earlier in March that electric vehicles (EVs) with a power output of 110kW and below would be recategorised into Cat A, upping the threshold from 97kW previously.

While the move is designed to make such EVs more affordable to the mainstream, a net effect could be even more upward pressure on Cat A COE premiums, given that it would lead to increased demand and more competition in this segment. The move will only kick in from May, so we might see a slight cooling in demand before prices start to rise again from that point on.

In the meantime, everyone is watching and waiting to see when COE premiums would breach the 100k mark, a milestone which has only happened once in history, way back in 1994. With rapidly rising inflation caused by global events, car ownership in Singapore has never been a more expensive affair.

• 
  YHI Corporation marks 50 years with Yokohama unveiling 3 new tyres
• 
  If you own an EV and live in a condominium, you need to read this
• 
  2024 Audi A3 30 TFSI MHEV Sportback First Drive Review: Friendlier Cat
• 
  New BYD showroom at Robinson 77, run by newly-appointed dealer, Harmony Auto
• 
  The new Category A Volkswagen Tiguan lessens pain in bum