Singapore sees dip in COE premiums, with Cat A & B resetting to 2022 values

Singapore witnessed most of its Certificate of Entitlement (COE) premiums closing lower in the first bidding session for January 2024 on Thursday (Jan 4), with Category A and B premiums plummeting to their lowest levels since early 2022. This significant drop indicates a shift in the vehicle market, possibly triggered by various economic factors.

The premium for Category A cars, which includes vehicles 1,600cc and below with horsepower not exceeding 130bhp, closed at an astonishing S$65,010. This is a drastic decrease from the S$85,000 in the previous bidding exercise and marks the lowest figure recorded since February 2022.

Similarly, Category B, which is for larger and more powerful cars, experienced a notable fall. Premiums dropped from S$110,001 to S$85,010, reaching a level not observed since January 2022. This indicates a cooling in demand for higher-end vehicles, which might be a result of changing consumer preferences or broader economic pressures.

The Open Category COEs, which are typically used for large cars, also saw a decrease, falling from S$118,388 to S$106,338. Meanwhile, COEs for commercial vehicles, encompassing goods vehicles and buses, dipped slightly to S$67,599 from S$69,423 in the previous bidding.

Contrary to the overall trend, motorcycle premiums experienced a slight increase, closing at S$9,114, up from S$9,002. This rise might reflect a growing interest in more economical and agile modes of transportation amidst the broader market downturn.

The bidding session attracted a total of 3,303 bids, with 2,422 COEs available. This recent activity comes after the COE quota for the November 2023 to January 2024 quarter was increased from the previous quarter, bringing the total supply of COEs to 14,388.

The drop in COE premiums, especially for private cars, might provide a window of opportunity for potential buyers who have been waiting on the sidelines for a more favorable market. However, prices may rise in the February bidding after the end of the introduced quota hike.

Singapore LTA increases COE supply to combat record-high vehicle premiums

In early November last year, the Land Transport Authority (LTA) announced an increase in the supply of COEs, 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.