[SINGAPORE] The premiums for all COE (certificate of entitlement) categories slumped and the big car premium fell for the first time this year. Motor distributors were not surprised as they said that buyers have started finding the prices too high and are now hoping that the COE supply would rise.
"Demand is weak because prices have gone up too much for most people," said the sales manager of a Japanese dealership. "Plus they all think a whole lot of COEs will be released soon."
The recent surge in COE premiums had forced the government to examine two possible ways to ease the COE supply crunch.
The Land Transport Authority was tasked by Transport Minister Lui Tuck Yew to see if the vehicle growth rate can be more flexibly slowed down from 1.5 per cent to 0.5 per cent, and whether the clawback of the COE oversupply in 2008/2009 can be alleviated by deferring the adjustments to be made.
The LTA will announce its findings next week.
With many prospective buyers praying for government intervention, showrooms across the island were largely quiet over the past two weeks.
"Even with price cuts for all my models, our showroom traffic has dropped by at least half," lamented the boss of a mid-sized mass market make.
In yesterday's COE bidding exercise, Category A - for cars below 1,600cc - shed $4,599 to $58,001.
Cat B - for cars above 1,600cc - slid $6,834 to $85,216 - the first time this year that this big car COE premium has registered a decrease.
Cat E - the open category - fell $2,101 to $86,889.
Meanwhile, Cat C - for goods vehicles - was $1,447 lower at $57,106, while Cat D - for motorcycles - was down $131 to $1,890.
A senior executive at a dealership representing a volume Japanese make said that the Cat A premium - for so-called bread-and-butter cars - would probably have been lower at about $52,000 if not for the strong bidding by taxi operators.
"Four of them were competing among themselves during the last minutes of the tender," he said. "They didn't get a lot of COEs but they managed to drive up the price."
Overall, the general manager of a multi-franchise dealership believes weak market conditions due to unsustainable prices are the real reason for the lower premiums.
"COE premiums would have fallen sooner or later," he said. "The announcement that the government is going to tweak the COE supply only brought forward the fall."
To back up his assertion, the general manager pointed to the number of Cat B bids received yesterday.
"It was 12 per cent less than the previous tender," he said. "That means demand for big cars has fallen even though you have a small quota and several new luxury models that were recently launched."