COE premiums, like Covid-19 cases, reached new heights in Singapore in September. What does that mean for the road ahead?
The last few weeks have seen a worryingly uptick in Covid-19 cases in Singapore, with infection numbers breaching the four digit mark for several days in a row.
Ordinarily, this would be cause for concern, and past history indicates that folk out there would be more cautious with big money purchases when times are uncertain. But then again, we live in unordinary times, and there’s really no knowing how things are going to turn out.
Like our Covid-19 numbers, the latest COE bidding exercise saw premiums reach new heights in the second round for September. Category B, notably, which are for cars with engines that make more than 130hp, or 1.6-litres in capacity, saw prices go up from S$62,600 to S$68,310, an increase of S$5,710.
Category E meanwhile, which is open to all vehicles except motorbikes, breached the 70 grand barrier, going up by S$5,302 to end at S$70,002, from S$64,700 previously. It’s the highest figure in six years, with the last time premiums in this category crossing the S$70,000 mark being June 2015.
Category A, which is for ‘mainstream’ cars (with less than 1.6-litres of engine capacity, or an engine output of less than 130hp), saw a more modest rise of just S$1,000, going up from S$47,000 to S$48,000.
The situation is a bit hard to explain, with many industry insiders also perplexed at how things are panning out. Cat A is probably a slightly more accurate reflection of what things are like on the ground, with consumers shopping in this category being more careful and prudent with their money, hence the slightly less drastic fluctuations in recent times.
Categories B and E are a bit more complex however. As we’ve explained all along, it could be a combination of reduced COE quotas, along with the fact that buyers shopping for bigger cars tend to have more financial leeway to ride out uncertain economic times. But those factors only go so much towards painting the full picture.
It could be possible that as we’re approaching the end of the year, dealers would be more aggressive in bidding for COEs as they try to hit their year end sales targets. Perhaps it could also just be pandemic fatigue. After all, the messaging from the authorities is that Covid-19 is here to stay, and that we all have to live with it. And so, pandemic or not, buyers are ready to plonk down their hard earned cash on that long-desired car purchase, with pent-up demand being unleashed after what has been a difficult year and a half for many.
The truth is probably a little bit of all of the above, but the signs are pointing towards a general upward trend for COE premiums. The only question is how high, and how much of it is affected by external factors like the pandemic and whatever relevant measures are being imposed to control it. Judging by the latest exercise though, it seems like Covid-19 will have less of an impact on COE prices going forward, and that we’re gradually transitioning into a ‘new normal’ from this point on.