COE supply up by a third for next quota period

SINGAPORE - The supply of certificates of entitlement (COEs) for the May-July quota period will be one-third bigger than it is today, but motor traders do not see the prices of the certificates for cars falling significantly.

This is the first expansion of the quota, which has been shrinking for seven years.

It is triggered by more vehicles being taken off the road in the January-March period, as cars registered during the boom years a decade ago approach the end of their statutory 10-year lifespan.

COE supply is determined largely by the vehicles scrapped in the preceding months.

In total, 4,019 COEs will be available for bidding each month, the Land Transport Authority (LTA) said yesterday. This is 32 per cent more than the figure today. Of this total, the supply for commercial vehicles will increase the most, rising by 47 per cent to 770 a month.

Car COE supply will jump 42 per cent to 2,563 a month. This includes Open COEs, which can be used for any vehicle type but end up mainly for bigger cars.

But motorcyclists, who are already facing record-high premiums, may have to brace themselves for even higher prices. Their COE supply will shrink by 4.6 per cent to 686 a month.

Motor traders, however, do not expect car COE prices to plunge.

Mr Raymond Tang, secretary of the Singapore Vehicle Traders Association, said: "Percentage-wise, it looks like a lot but, in absolute terms, the increase is not big. But after so many years (of prices rising)... we hope prices will stabilise now."

Mr Glenn Tan, president of the Motor Traders Association, expects prices of Category A COE (for cars up to 1,600cc and 130bhp) to fall to "the low $70,000s", from the current $77,400.

But he reckons Category B (for cars above 1,600cc or 130bhp), now hovering around $84,500, will only "fall marginally". "I think the gap between A and B will widen," he added.

Industry players expect bigger price drops in the latter part of the year, as COE supply should continue to grow.

But Mr Neo Nam Heng, president of the Automobile Importer and Exporter Association, said a more substantial growth could be realised sooner than later.

He said "more than 9,000 pieces" of COEs were unaccounted for when the LTA moved from a six-month quota formula to a three-month formula in January.

Therefore, cars scrapped in the July-September 2013 period were "lost".

The LTA, however, maintains that there was "no loss".

This article was published on April 12 in The Straits Times.

Get a copy of The Straits Times or go to straitstimes.com for more stories.