SINGAPORE: In the latest Certificate of Entitlement (COE) tender exercise that concluded on Wednesday (20 Dec), all COE premiums exhibited a decline.
The most significant drop was observed in Category B, with the premium falling by over S$20,000 (US$15,045) from S$130,100 to S$110,001, marking a 15 per cent decrease.
This category covers larger and more powerful cars.
Additionally, Open category COEs, primarily utilized for larger vehicles, decreased from S$133,388 to S$118,388.
The premium for Category A cars, comprising vehicles 1,600cc and below with horsepower not exceeding 130bhp, closed at S$85,000, down from the previous exercise’s S$88,020.
COEs for commercial vehicles, encompassing goods vehicles and buses, saw a decrease to S$69,423 from S$71,001 in the prior bidding exercise, while motorcycle premiums closed at S$9,002, down from S$9,858.
This decline follows the record-high COE prices in October, hitting S$150,001 in Category B and S$158,004 in the Open Category.
The COE quota for the November 2023 to January 2024 quarter was increased, resulting in a total supply of 14,388 COEs.
Singapore LTA increases COE supply to combat record-high vehicle premiums
In early November, the Land Transport Authority (LTA) announced an increase in the supply of COE, which are essential for vehicle ownership in Singapore.
An additional 1,614 COEs were said to be introduced into the pool from November 2023 to January 2024. This is on top of the reallocation of 1,895 COEs for smaller and larger cars from the guaranteed deregistrations.
The biggest boost is in the category for larger cars, with engines above 1,600cc or 130bhp, and electric vehicles (EVs) above 110kW, which will see an increase of 863 COEs. This is a 22.4 per cent increase, raising the total to 3,800 COEs available for this category.
For smaller cars and EVs with a power output of up to 110kW, there will be an additional 546 COEs, an 11 per cent increase leading to a total of 5,513 COEs.
Commercial vehicles will also see a boost with an additional 205 COEs, taking their total to 1,129 for the November to January period.
The LTA stated, “Potential buyers may want to take note that the COE quota for Categories A, B, and C will continue to increase in 2024 before reaching the peak supply period from 2025, while Category D quota in 2024 is expected to remain comparable to 2023’s.”
Responding to questions filed by Members of Parliament on 6 November, Acting Minister for Transport Chee Hong Tat emphasized the intention to reduce the peak-to-trough ratio by using a ‘cut-and-fill’ approach, which aims to alleviate supply fluctuations while still adhering to Singapore’s zero-vehicle growth policy.
Singapore’s zero-growth policy, designed to manage traffic congestion, bases the number of available COEs for bidding on the number of deregistered vehicles.
Minister Chee Hong Tat addressed concerns about rising COE prices and highlighted that the large difference in quotas between peak and trough years leads to higher volatility in prices, assuming relatively constant demand.
Under the current system, COE quotas for the next quarter are determined using the moving average of deregistrations in the four preceding quarters.
Minister Chee suggested that a ‘cut-and-fill’ approach could yield better results for all stakeholders, maintaining the COE system’s role as an allocation mechanism while stabilizing prices in the market.
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