By Christopher Tan, Senior Correspondent

SO the long-anticipated review of the COE supply formula has taken place.

Instead of basing the quota on the number of vehicles expected to be taken off the road - which is like reading tea leaves - the Land Transport Authority will now hinge supply to actual deregistrations.

The new system is to address a decade of mismatches.

In the early noughties, the number of COEs released had always been far fewer than actual deregistrations.

Then in the last five years, we witnessed an oversupply that caused car premiums to crash.

In one case, to $2.

While the revised system removes the probability of error of the previous forecasting method, it could give rise to a lag between past demand (time of deregistrations) and present demand (period of bidding).

This effect was in play between 1990 and 1999, when the supply formula was based on past deregistrations.

The latest version is, of course, more responsive because supply will be determined in six-monthly lots, instead of 12-monthly as it was then.

But there will still be a lag: a six-month lag instead of a 12-month lag.

In the case of the maiden quota of the new formula, the supply will also be abnormally low because it is based on deregistrations in 2009, a recessionary year which saw the number of cars scrapped or re-exported falling to the lowest level in 10 years.

So, from this month, the number of certificates available each month will be almost 40 per cent fewer than at the same time last year.

This will almost certainly lead to sharply higher premiums.

More so if the economy keeps strengthening.

Motor traders reckon average car COEs will reach $60,000 in the next couple of years.

Car buyers will be hit by this price spiral - especially first-time buyers because they won't have a trade-in vehicle that will appreciate with a rising market.

Those who are already car owners are not much better off.

Although the resale value of their current rides will rise in tandem, they will have to fork out more for a replacement.

For most, it will be a zero-sum game.

The pressing question now is, what can consumers do before prices start defying gravity in a big way?

As always, there is no one-size-fits-all answer because your course of action depends on so many situations, circumstances and conditions.

For the sake of brevity, let us narrow things down to three or four options.