S Iswaran
SINGAPORE: Certificate of entitlement (COE) premiums went on a relentless upward march for much of 2022, with all-time highs set in four out of five categories – larger and more powerful cars, commercial vehicles, motorcycles and the open category.
Premiums for the remaining COE category – for cars with less power – ended S$1,511 (RM4,956), or 1.6%, shy of the S$92,100 (RM302,088) record set in January 2013 at the second-last tender exercise of 2022.
Consumers may get a slight reprieve in the latter half of 2023, however, as vehicle population data suggests that premiums may come down slightly as the supply of COEs starts to increase.
“The supply of COEs may improve from August but it can happen as late as November 2023,” said Ron Lim, head of sales at Nissan agent Tan Chong Motor
.
Nicholas Wong, general manager of Kah Motor, which distributes Honda cars, hopes that more COEs will be available from June as the number of deregistrations increases.
He estimated the increase in the COE category for larger and more powerful cars and electric vehicles (EVs) to be “less than 3%”, while the supply of COEs for smaller and less powerful cars may grow by as much as 10%.
But before the COE supply improves, 2023 is going to start where 2022 ended – where the supply of COEs is low and premiums are high.
The high prices of 2022 have been driven by the low supply of COEs, which is primarily determined by the number of vehicles being taken off the road.
Transport Minister S. Iswaran said in November that demand for vehicles has been strong.
Besides the restrictive supply, other factors also contributed in chasing up premiums.
The two-car COE categories are differentiated by engine size and power output.
In May, a criterion specific to EVs was introduced as part of Singapore’s push for EV adoption.
EVs with up to 110KW of power were moved to the typically cheaper category A, where the power threshold for non-EVs was 130bhp or 97KW.
Some motor dealers said the move effectively pushed up the price of category A COEs, as EVs receive S$25,000 (RM82,000) in rebate through the enhanced vehicular emissions scheme. This gives buyers more bidding muscle over non-EVs.
Comparing COE premiums from the first and last tender exercises in 2022, the price gap between the traditionally cheaper car category and the more expensive category B, which is meant for larger and more powerful cars and EVs, has narrowed from 34% to 22.7%.Category A prices managed to close in, even as category B prices have also been climbing in 2022, hitting a record high of S$115,388 (RM378,472) at the first tender exercise in November 2022.
Although open category COEs can be used to register any type of vehicle other than motorcycles, they usually end up being used to register category B cars.
The price for this type of COE hit a new high at the same tender to close at S$116,577 (RM382,373).That particular tender exercise was the first under the new quota period from November 2022 to January 2023.
The number of COEs for category B cars available was 12.9% less than in the previous three months, while that for open category vehicles was 11% smaller.
Category B COEs apply to a large variety of models, spanning many petrol-hybrid models, larger family cars, as well as the top-rung luxury limousines and sports cars.
This increases the demand for category B COEs, and buyers of the more expensive models also tend to be able to afford higher COE prices.
Motorcycle COE prices broke records repeatedly in 2022. The peak of S$13,189 (RM43,260) set in November was more than 7.8 times higher than the S$1,701 (RM5,579) peak of 2010, when the supply of such COEs was at its lowest.
This is despite measures introduced in March on the back of surging motorcycle COE premiums. Back then, the authorities halved the validity period of secured COEs to three months, so the unused COEs can be returned to the pool for bidding sooner.
The bid deposit was also raised from S$200 (RM656) to S$800 (RM2,624) to make it more expensive for bidders to “waste” a secured COE. — The Straits Times/ANN
