THE Certificate of Entitlement (COE) premium for big cars jumped past the S$105,000 mark, while mainstream cars saw a slight drop in May’s first round of bidding.
The price for Category B rose 2.9 per cent or S$3,001 to S$105,002.
Category B is the category for larger, more powerful cars with engines of more than 1,600 cubic centimetres (cc) in capacity or which have more than 97 kilowatts (kW), or for electric vehicles (EVs) with more than 110 kW.
This marks the category’s fourth consecutive rise since the first round of bidding in March, when it was S$96,010.
The price for Category A dipped 0.4 per cent or S$406 to S$93,604.
The Category A COE applies to mainstream cars that have engines of up to 1,600 cc in capacity or with up to 97 kW of power, or for EVs with up to 110 kW of power.
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Category E, the open category, increased by 1.4 per cent or S$1,440 to S$104,689.
A Category E certificate can be used to register any type of vehicle except for motorcycles, but is typically used to register Category B cars, which are almost always the most expensive type of COE.
Its behaviour has mirrored Category B closely, with this increase being its fifth consecutive rise since February’s second round of bidding, at S$94,006.
Premiums for commercial vehicles and buses, under Category C, climbed 2.2 per cent or S$1,499 to S$70,001.
Category D, which is used for motorcycles, saw the largest drop in this round of bidding. The premium fell 4.9 per cent or S$487 to S$9,503.
Last month, the Land Transport Authority announced that the overall COE quota for the period May to July had increased by 2.7 per cent to 15,104.
The quota for Category A increased 3 per cent to 5,775, while Category B rose by 1.3 per cent to 3,944.
Two car dealers The Business Times spoke to said that the contrasting results for categories A and B could be due to a shrinking price gap between premiums for the two categories.
“(Categories) A and B were quite close in terms of price last round. That would encourage some customers to make the jump from A to B,” said Ng Choon Wee, commercial director for Hyundai distributor Komoco Motors.
In April’s second round, the price difference between the two categories was S$7,991, compared with S$12,334 in the first round that month.
“When the two categories become closer to each other in price – usually (under) S$10,000 – that’s when consumer sentiment shifts. Once you factor in promotions… buyers will tend to opt for a Cat B car,” said Jason Lim, the managing director of Eurokars Auto, a dealer for BMW.
Another car dealer, who declined to be named, said that luxury brands such as BMW and Mercedes-Benz had done well in recent weeks and raked in a healthy order bank, which would explain the higher demand for Category B.
When queried on this by BT, Lim declined to give figures, but said that “this is a good year for BMW”.
“But we also have seven models in Category A, so it’s not entirely down to us generating price pressure in Category B,” he added.
As for Category A’s almost unchanged price level, both Ng and Lim agreed that the S$90,000 mark seems to be the plateau for the category at this point in time.
“I actually thought Category A would come down a bit more this round, as we’ve seen that the S$90,000 mark is the resistance level,” said Ng. “The price (rose to) this level quite quickly this year, and (has) been relatively stable since.”
They also said that with the latest COE quota announcement, they expect more stability in passenger car COE premiums over the next three months.
“The government has (made an effort to keep) the quota consistent – you can see what they are doing. Although it hasn’t helped to cool COE premiums further, since we are still at high price levels, so maybe more needs to be done,” said Ng.
“I think consumers have seen that the price levels are quite stable and (may) be getting used to (them) – they understand that it’s a controlled market,” said Lim.
“The key is stability: you don’t want massive swings in price. But with stability, it’s good for the market, good for dealers, and good for consumers, too.”
