As widely expected, there will be more certificates of entitlement (COEs) up for grabs in the next three-month quota period starting in August. The Land Transport Authority announced yesterday that there will be 7,281 COEs a month for the period - 9.7 per cent more than in the current quota season.
Car buyers and sellers will get the lion's share of the increase. The number of car COEs - including Open certificates - will rise by 18.3 per cent to 6,207 a month.
The main beneficiaries, however, are likely to be those going for bigger cars.
This is because the Open COEs - which can be used for any vehicle type but ends up mainly for bigger cars - will post the biggest increase. The category will grow by 34 per cent to 722 certificates a month.
Car dealers expect subsequent quotas to continue expanding right up to late 2017 or so. Hence, premiums should continue to slide.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the latest quota "is pretty much in line with our expectations".
He said premiums are likely to fall "given that the quota is continuing to rise, and that there is currently no big backlog of orders in the market". Mr Lim noted that showroom traffic picked up last weekend after premiums fell noticeably in the last tender, "but it was not like the rush we saw during the last big drop over Chinese New Year ".
Although the drop in prices then was smaller than the slide last week, bidding was fuelled by fear that prices would soar on the back of a more stringent carbon tax scheme. Hints from the Government in March that it would adopt a zero-growth policy for Singapore's car population fanned the fear.
Mr Lim said the market should be "more sustainable" if buyers do not give in to the "herd instinct".
Singapore Vehicle Traders Association vice-president Raymond Tang concurred: "With the bigger quota, premiums should soften. Our worry is the behaviour of consumers."
The only category with fewer COEs will be commercial vehicles. In fact, it will see a 50 per cent supply shrinkage, as more fleet owners subscribe to the Early Turnover Scheme (ETS). The scheme encourages businesses to replace old, pollutive vehicles with new ones at subsidised rates.
Mr Michael Wong, general manager of Isuzu agent Triangle Auto, said the scheme is "doing well". He said his firm alone has been seeing about 200 renewals a month.
"If the ETS continues to be popular, then the COE premium should not rise much," he noted.
This article was first published on July 14, 2015.
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