This month’s COE exercise is a shock to many. The biggest drop is in category B and this is the lowest for Cat B since February this year.
The Certificate of Entitlement (COE) market in Singapore has been a topic of immense interest, both for motorists and car buyers. The COE is a critical certificate that allows individuals to bid for the privilege of owning and driving a car for a decade.
However, the prices for these COEs reached record-breaking highs, with some exceeding S$150,000 last month. In a surprising turn of events, the Ministry of Transport has recently announced an increase in the supply of COEs, leading to a significant drop in prices by nearly 20 percent.
Premiums Plummet as Supply Increases
In the most recent COE bidding exercise, which concluded on November 8, premiums saw a dramatic decline across all categories, marking a significant shift from previous trends.
Category B, for larger cars above 1,600cc or 97kW or fully electric cars with output over 110kW, witnessed the most substantial drop, with premiums plunging by an astonishing S$40,000, equivalent to a 26.7% decrease, from S$150,001 to S$110,001.
Open Category COEs, known for their versatility, as they can be utilised for various vehicle types, especially larger cars, saw a considerable reduction, with premiums falling by 20.9% to S$125,011 from S$158,004.
Category A cars, which include vehicles with engine capacities up to 1,600cc and horsepower not exceeding 130bhp, recorded premiums of S$95,689, down from S$106,000 in the previous exercise.
Commercial vehicle COEs, comprising goods vehicles and buses, witnessed their prices fall to S$78,001 from S$84,790 in the preceding bidding exercise. Even motorcycle premiums experienced a reduction, with prices dropping to S$10,889, down from S$11,201 in the last exercise.
The significant drop in COE premiums can be attributed to the recent increase in COE supply.
The Land Transport Authority (LTA) had announced that the COE quota for the November 2023 to January 2024 quarter would be expanded further.
In addition to the 1,895 reallocated COEs announced last month, an extra 1,614 Category A, B, and C COEs were reallocated.
This increase brought the total supply of COEs for the quarter to 14,388. The Ministry of Transport’s strategy to bring forward COE quota from “guaranteed deregistrations” in peak years has contributed to this boost in COE supply over the past six months.
Acting Minister for Transport Chee Hong Tat on Monday (Nov 6) / CNA
Implications for the Car Buying Market
The significant drop in COE premiums has several implications for the car-buying market in Singapore.
Firstly, the more affordable COE prices may attract a surge in interest from potential car buyers previously deterred by the exorbitant COE prices.
The substantial decrease in Category B COE premiums, which cover larger and more powerful cars, could make it more feasible for individuals to consider purchasing such vehicles.
Moreover, with increased COE supply and the potential for more stable pricing, there may be renewed confidence in the market.
Car buyers may be more willing to invest in new vehicles with the expectation that COE prices will remain manageable, thereby stimulating car sales and potentially boosting the automotive industry in Singapore.
However, it’s essential to remain cautious. The government’s initiatives to reduce price volatility are in progress.
As noted by Acting Minister for Transport Chee Hong Tat, the large difference in quotas between peak and trough years results in price fluctuations, assuming consistent demand.
The Future of Car Buying in Singapore’s COE Market
The recent drop in COE premiums across all categories in Singapore marks a significant shift in the market.
With increased COE supply and more manageable pricing, potential car buyers in Singapore have a new opportunity to navigate the COE market with optimism and anticipation.
However, the long-term effects will depend on the government’s measures to address price volatility.
As the automotive industry keeps a close eye on these developments, it’s clear that the COE market in Singapore is experiencing a transformative period that could reshape the car-buying landscape.
Regardless of whether you are currently considering buying or selling a car, it will undoubtedly take some time to observe how the market responds to the significant drop in COE prices, especially after reaching all-time highs just a few weeks ago.
Stay connected with us for ongoing updates and in-depth coverage!
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