A SHORTAGE of certificates of entitlement (COEs) for motorcycles is the reason that prices hit a high of $6,801 in the latest bidding exercise on Wednesday, according to industry players.
They pointed to the quota "draining out" over the years because, under the COE system, a percentage of deregistrations from each vehicle group has to be contributed to the open category.
While this proportion has been progressively slashed from 25 per cent in the 1990s to 10 per cent currently, the motorcycle segment has been hit hard.
This is because open category COEs - in the range of $70,000 - are too pricey for motorcycle buyers, and end up in the hands of car buyers.
Singapore Motor Cycle Trade Association president Tony Yeo said yesterday: "When motorbikes are scrapped, we are contributing more to the car (population)."
Mr Yeo said the result is that motorcycle numbers have been growing at a much slower pace compared with cars.
Last year, there were 616,609 cars on the roads, a 48 per cent jump from 10 years ago. Comparatively, the motorcycle population grew only 6 per cent over the same period, reaching 144,404.
In fact, this number has shrunk by close to 2 per cent from 147,282 in 2010.
Mr Wilson Phoon, managing director of leading dealer A.S. Phoon, said: "Once the population shrinks, you will have fewer scrapped (motorcycles) and fewer COEs will be recycled back. So eventually, the quota will get smaller and smaller."
COE quotas are released every quarter and are determined primarily by the number of vehicles deregistered in the preceding three-month period.
Between February and this month, there was a monthly average of 570 motorcycle COEs available for bidding.
Mr Yeo noted that the number of bids submitted has been about 30 per cent more than the supply.
"The demand is always there, and this will push the price up. People need a bike to make a living, like dispatch riders," he added.
While there will be around 15 per cent more motorcycle COEs in the next quarter, Mr Yeo said he would not be surprised if the premiums hit between $7,000 and $8,000 before softening.
Mr Eugene Mah, general manager of dealership Mah, said prices can stabilise only when the monthly quota is somewhere between 900 and 1,000.
With a quota shortage, dealers may be forced to bid higher to secure the COEs in order to fulfil their orders on time, according to Mr Jackson Oh, a manager at Wing Yap Motor.
Industry observers say demand may also be fuelled by former car owners who are turning to motorcycles, but they agreed that it is hard to ascertain their numbers.
Mr Larry Liew, 34, a research assistant who paid $900 in 2010 to renew his motorcycle COE, said: "The COE price now is crazy. At close to $7,000, I can buy two brand-new class 2B bikes, which are about $3,000 each."
This article was first published on April 24, 2015.
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