By Adrian Lim
Measures announced by the Land Transport Authority (LTA) yesterday will help ease moves to cut the growth in the number of vehicles here.
But the supply of the Certificate of Entitlement (COE) will still be tight and prices are expected to head northwards, said motoring players.
"There will still be a projected 10 to 15 per cent drop in COE supply from August to January next year," said Mr Ron Lim, general manager of sales and marketing at Tan Chong Motor Sales.
And this impending COE supply crunch will send prices up, Mr Lim told my paper.
LTA earlier announced in October last year that it will reduce the vehicle growth rate from the current 1.5 per cent per annum to 0.5 per cent from August.
However, the authority said yesterday it will delay the cut to 0.5 per cent to February next year, and let the vehicle population grow at 1 per cent from August.
So, with the change, the COE supply will still be tightened from August to January next year.
Even so, LTA estimated that there will be around 390 more COEs made available each month.
LTA also said it will defer the clawback of a previous oversupply of COEs for a year, from August to July next year. This will make available 266 more COEs per month during the period, it estimates.
The authority said it will also cut the contribution of COEs from de-registered vehicles to the open category.
Currently, 25 per cent go to Category E, which can be used to purchase any vehicle type.
But this will be cut gradually to 20 per cent from August and to 15 per cent from February next year.
LTA said this will help "maintain a more stable supply of COEs in each COE category under a lower vehicle growth rate".
COE supply is affected by the vehicle-growth cap, the clawback from past oversupply, and vehicle de-registrations in the preceding six-month period.
The LTA's changes come after Transport Minister Lui Tuck Yew asked LTA this month to examine how the impending caps on vehicle growth rates - which have sent COE prices soaring - could be mitigated.
COE premiums have dipped slightly as a result.
For instance, at the latest bidding exercise, COE prices for Category A - for cars under 1,600cc - dropped from $62,600 to $58,001.
However, Mr Lim said that with yesterday's announcement, even though the cuts in COE supply will be "less severe", prices are expected to go up from "pent-up" demand.
"There is no major relief in the near term," he said.
Still, a veteran car trader, who declined to be named, said the measures will not address the possibility of prices of COEs for Category A - commonly used for Japanese and South Korean models - spiralling up.
This is because luxury brands are rolling out models in Category A and buyers of luxury-brand cars can afford to bid for higher-priced COEs.
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