What a better way to start the new year for Singaporeans with cheaper COE prices ? Certificate of Entitlement (COE) premiums for cars in Singapore experienced a substantial drop of more than 20% in the first tender exercise of 2024.
This unexpected decline has caught the attention of motorists and industry experts alike, prompting questions about the reasons behind this significant shift and whether it signals a sustained trend of decreasing COE prices.
Notable Drop in COE Prices in FIrst Tender of 2024
Category A and B COEs:
Category A, catering to less powerful cars and electric vehicles (EVs), witnessed a remarkable 23.5% drop to $65,010, bringing it close to levels seen in early 2022.
Category B, designed for more powerful cars and EVs, experienced a substantial 22.7% decrease to $85,010, falling below the $100,000 mark for the first time since October 2022.
Open Category COEs:
Open category COEs, known for larger and more powerful cars, saw a 10.1% decline to $106,388, reaching its lowest point since February 2023.
Did Santa Clause come to town or Caishenye came a little early this year ? But why the huge drop and what could actually be the reason for such a notable drop in COE prices ?
Based on the information that we have, here are some of the possible reasons for the drop and there may be more than one reason for this.
1. Reduced Showroom Traffic in December:
Car showrooms experienced a lull in December due to increased travel, resulting in fewer orders for cars and weaker demand for COEs.
2. Dealers’ Expectations and Strategies:
Dealers rushed to register cars before the new year to avoid changes in vehicle testing requirements and reduced tax rebates based on emission levels.
In a report by Straits Times, some dealers, like Mr. Anthony Teo, managing director of Vantage Automotive, expect dealers holding high-cost Open category COEs from October to allow them to lapse.
3. Government Interventions and Reallocation:
The government’s efforts to increase COE supply, with reallocations by the Land Transport Authority (LTA), have contributed to varying degrees of uncertainty in predicting future COE supplies. This can also be referred to as the “cut and fill” strategy as stated by the acting Minister of Transport.
With increased cost of living and the raise of GST to 9% in 2024, many would look forward to a greater drop in COE prices before entering the market.
This leaves us with the one question of “Will COE prices go any lower ?”
Anticipating Future COE Movements
The number of COEs available from February to April is eagerly awaited, with the government hinting at a continued increase in supply until the projected peak years of 2026 and 2027.
The supply of COE in the coming months is projected to be increasing as more cars are expected to be deregistered based on the numbers we have from the Land Transport Authority.