…and why it’s not actually that bad of a price jump, and how it shows COVID tightening purse strings in Singapore

SINGAPORE
Certificate of Entitlement (COE) bidding has finally resumed, and for passenger cars the prices have spiked.

Category A, for cars with engines 1.6-litres in capacity or less, and with less than 130hp, rose from S$31,210 to S$33,520 – a S$2,310 difference.

Category B, for cars with engines larger than 1.6-litres, or with more than 130hp, rose even more, from S$30,012 to S$35,889, a S$5,877 difference.

Category E, which is the Open Category but typically used for Cat B cars anyway, rose S$2,489, from S$32,500 to S$34,989.

Bear Necessities

First off, it should really be no surprise that COE prices went up, and in fact, this result is quite a tame one.

If we had a dollar for every time we heard “But it’s a crisis! People aren’t spending!” we could run this website’s server for a week. Or two. Jokes aside, it’s more correct to say they are spending, but on necessities – and things that will keep them safe. There’s also the fact that COVID could have driven some buyers to shun public transport (if they can afford it).

And as we often repeat – Singapore’s car market has artificially reduced levels of supply because of the COE. It could be that demand has fallen mightily, but there’s no way we can tell unless demand falls to below COE quota levels – and that is something that definitely won’t happen.

Since the COE was suspended when the Circuit Breaker kicked in on April 7, it’s been 12 whole weeks, or 13 weekends, without COE. That means four months of pent up demand – demand boosted by a new wave of car buying here.

12 Weeks Of Anti-Christmas

As detailed in our very detailed analysis story on how COVID has changed car buying here in the past six months, car dealers have gone all out to ensure that nothing stands in your way if you want to buy a car: Contactless buying experience, test drives at your door, more digital showrooms, hell you can even get a loan without affecting your TDSR.

So much so that the past 12 weeks have been a sort of deranged, anti-Christmas for car buyers, since we’ve also seen mad discounts and sales. Pair that with the fact that ‘revenge buying’ to enact a sense of control in a nutso world, and we could even have had a sales boom.

That’s reflected in the number of bids (a good indicator of overall demand) last round: Cat A saw 3,061 bids, which is twice the usual amount. In fact, the last time we had this many bids was two years ago.

But the LTA in its benevolent enormity has headed a big price spike off by doling out more of the backlogged quota first – a whole 30 percent worth. We wonder if it’s got anything to do with all those decorations on lampposts everywhere, it’s almost festive.

The Black Hand of COVID

That’s not to say the spectre of COVID couldn’t be seen in the numbers, and we fancy we can indeed see it. Cat A and Cat B now have roughly the same quota (COE pieces available), which is 1,289 and 1,291 respectively. They also received the same number of bids, roughly: 3,061 and 3,160 respectively. So why is Cat B that much higher?

Put it down to the fact that Cat B is seen as the luxury car category. While this concept has lessened in recent times, COVID seems to have thrown that into starker relief for once.

How? Let’s put it this way: Not all Cat B cars are luxury cars, but almost all ‘real’ luxury cars are Cat B cars. If you’ve waited four months for your S$640k Maserati Levante Trofeo, topping up S$5k is not a problem.

But if you’ve needed a car to drive your elderly parents around, and just faced a pay cut, even a S$2k top-up could be too much.