SINGAPORE – Certificate of entitlement (COE) prices dropped slightly across all categories at the latest tender exercise on Oct 23. This is the first time COE premiums have dipped across the board since June.
The premium for a Category A certificate, which is used to register smaller, less powerful cars and electric vehicles (EVs), ended at $102,900 – 0.9 per cent lower than the $103,799 recorded at the previous exercise on Oct 9.
For Category B COEs, meant for larger, more powerful cars and EVs, the premium fell 1.8 per cent to $113,890, from $116,002.
The price of an Open category (Category E) COE was $114,700, 1.1 per cent lower than the previous premium of $116,000.
Such certificates can be used to register any vehicle type other than motorcycles, but are almost always used for bigger, more powerful cars.
The commercial vehicle (Category C) COE premium was $72,939, 2.8 per cent lower than the $75,009 recorded in the previous exercise.
The motorcycle (Category D) COE premium dropped by 4.1 per cent, from $10,001 two weeks ago to $9,589 in the latest tender.
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This decline in premiums comes weeks after the Land Transport Authority announced on Oct 4 that the number of certificates available for bidding between November 2024 and January 2025 will increase by 3.6 per cent to 15,834, compared with 15,283 from August to October.
Motor dealers told The Straits Times that the drop in premiums was not significant and can be classified as a “stabilisation” in prices.
They said premiums have not returned to levels recorded in the Sept 18 exercise before large-scale car sales event The Car Expo, which took place on Oct 5 and 6.
But they inched closer to the “normal” levels recorded in the Sept 18 exercise, which preceded the longer three-week gap – longer than the regular two-week intervals between each exercise – that pushed prices up in the Oct 9 exercise.
Ms Sabrina Sng, a managing director at multi-franchise group Wearnes Automotive, noted that the slight drop was expected, as there would “naturally” be a lull in sales after large-scale car sales events.
But there is a strong underlying demand for COEs, she said, because Category A and B premiums still ended higher than the figures before the “spike” from the previous exercises.
Ms Sng also attributed this to a significant number of recent new car launches.
She added that this stabilisation in prices might allow customers to realise that these premiums of around $100,000 for Category A and $110,000 for Category B are the “new norm”, and business at showrooms may improve.
Mr Nicholas Wong, chief executive of Honda agent Kah Motor, termed this dip a marginal correction of prices, back to pre-spike levels two exercises ago.
He noted that overcoming customers’ psychological barrier to make purchases would require Category A COEs to fall below $100,000.
So, they may not be tempted to buy now as Category A COEs are at $102,900, and the decrease of $899 from the Oct 9 exercise is “barely enough to cover” the hike of $5,275 from the previous exercise.
Mr Wong also said that many EV brands are launching models that qualify for Category A COEs, fuelling “aggressive bidding” for this category and leading to prices going “out of control”.
He added that the extension of the Land Transport Authority’s EV rebates to encourage EV car adoption till the end of 2025 has also created upward pressure on prices.
Mr Wong does not foresee significant changes in premiums in the next few rounds of bidding because of the “very negligible” increase in the number of certificates available from November 2024 to January 2025.
Similarly, Ms Sng predicts that they would “at least” hover around the current prices because of the multiple new car launches and substantial number of new car deliveries.