IN THE coming six months, car buyers will have about 20 per cent fewer Certificates of Entitlement (COEs) to vie for than in the six months between February and this month.
The reduction will hit buyers of small cars hardest. From next month until January, the monthly number of certificates for cars 1,600cc and below will drop 36.6 per cent from 1,239 to 786. Industry players said this is likely to send COE premiums - already among the highest in more than a decade - up for the price-sensitive buyers.
The Land Transport Authority (LTA) has also cut the quota significantly for Open category COEs: 485 will be available every month, down 21.4 per cent from the current 617. This is likely to hit buyers of luxury cars. Open category COEs can be used to register any type of vehicle but mostly end up being used for bigger cars.
This cut will likely negate the 0.3 per cent increase (from 699 to 701) in Category B COEs, the category for cars above 1,600cc.
COEs are the tool through which the Government controls the number of new cars allowed on Singapore's road network. Every six months, the LTA releases the quotas allowed for the various classes of vehicles; these figures are largely determined by an allowed growth quantum and the number of vehicles taken off the road in the preceding six months.
But even as the number of available car COEs is cut back by 20 per cent in the next six months, the number of available COEs for the following classes of vehicles will be increased:
- Goods and commercial vehicles: The monthly quota for this category will be 360, 12.9 per cent more than the 319 now available.
- Motorcycles: There will be 894 COEs every month, 9 per cent up from the current 820.
Overall, the number of COEs in the next six months will be 3,226 a month - 12.7 per cent fewer than the 3,694 available from February to this month.
The annual vehicle growth rate will be set at 1 per cent from next month - higher than the 0.5 per cent planned. Following a public outcry over the abruptness of quota cuts, the LTA had made the cuts more gradual; the 0.5 per cent rate will kick in only in February.
An exercise to reduce the number of COEs, to make up for the oversupply in earlier years, will be held off until next July. This will add roughly 7 per cent more COEs each month than originally planned, until the exercise resumes in August next year.
The COE quota for August 2012 to January 2013 would have been 655 fewer a month - instead of 468 fewer - had the Government not implemented the more gradual cut in vehicle growth rate and deferred COE adjustments for over-projections for a year.
Another move to slow the fall in COE supply has been to shrink the supply of Open COEs. A quarter of COEs from each of the four COE categories now go into making up the supply of Open COEs, but this allocation will shrink to 20 per cent next month, and to 15 per cent from February.
Mr Ron Lim, general manager of Nissan distributor Tan Chong Motor, said the cut in numbers is still drastic: 'Unless we see a corresponding weakening of demand by customers, there's only one direction for the COE prices to go.'
Already, COEs for small cars cost $59,421 at the last COE bidding; that for luxury cars, or those above 1,600cc, hit $82,289 at the most recent bid this month.
Additional reporting by Lua Jia Min