SINGAPORE, June 9 — An unwavering demand for cars in spite of high prices, coupled with an influx of high-income expatriates, have pushed the cost of Certificate of Entitlement (COE) premiums for large cars beyond the S$100,000 (RM319,000) threshold on Wednesday (June 8), industry watchers said.
They added that these factors would likely keep prices elevated for the rest of the year.
The factors, as well as a tight supply of COEs, were raised before as contributing to COE prices reaching nearly 30-year-highs in April for the open category of vehicles.
Car dealers also noted that three weeks have passed since the last COE bidding exercise, which is longer than the typical two-week interval between biddings. This means that car dealers would have collected more orders since the last bidding.
On Wednesday, COE prices for Category B hit S$100,684, up from S$95,889 in the last exercise, while prices for the open category hit S$100,697, up from S$95,901.
These were prices not seen since December 1994, when premiums in the then Category Four classification cost S$110,500.
Category B includes the larger and more powerful cars, while the open category premiums can be used for any type of vehicles except motorcycles but tend to end up being used for larger cars.
The larger cars are often seen to be more luxurious and industry watchers said that the demand for them remains strong.
Wong Kan Sing, managing director of Autolink Holdings car dealership, said that the high COE prices reflected the number of wealthy people in Singapore willing to part with such large sums of money to own a car.
“They are purchasing a lot of the Category B vehicles and are not really affected by the COE price. They just want to get their vehicles,” he said.
A COE is required to own and drive a vehicle in Singapore and it is typically factored into the price of the vehicle being sold.
With the Government’s zero-growth policy for cars, Wong said that he expects COE prices for Category B, or large cars, to remain in the S$90,000 to S$100,000 range until around the end of 2023.
That year, he said, will be the 10-year COE expiration mark for cars registered around late 2013. When they are de-registered, the COEs will go back to the quota for vehicles, bumping up supply and knocking down prices.
Transport analyst Terence Fan said that as Singapore opens up its borders in the midst of the Covid-19 pandemic, there have been more expatriates relocating here from other cities such as Hong Kong where Covid-19 restrictions are tighter.
Some multinational companies and foreign firms have also been relocating their senior employees who are used to having their own cars, the assistant professor at Singapore Management University said.
“So it’s a given that once they come here, they would naturally want to have their own vehicle.”
Now that the COE premiums for Category B and open category vehicles have crossed the six-figure threshold, car dealer Fed Wu, who is also the publicity officer for the Singapore Vehicle Traders Association, predicts that some potential buyers will likely wait out until COE prices moderate and go down before getting their cars.
As for what lies ahead, independent car broker Steven Lim said that COE prices will likely continue on its uptrend for the rest of the year.
He added that although the demand for larger cars in Category B remains strong, buyers of such cars in the lower-end of the category will be deterred from buying if COE prices keep climbing higher.
“A Toyota Camry is already S$180,000 to S$190,000. So if it goes any further, the Camry’s going to shoot beyond S$200,000,” Lim said.
“Previously you could buy a Mercedes-Benz E-Class with that amount. Buyers of Japanese cars are not going to pay that price.” — TODAY
