SINGAPORE, Nov 13 — At the Hyundai car showroom at Leng Kee Road on Sunday afternoon, several families — some with kids in tow — were checking out each car on display and speaking to sales staff.
Around 20 people were in the packed showroom when TODAY visited at 2pm, and there was a buzz of activity in the air.
“Showroom traffic doubled, (with people) enquiring for both Category A and B hybrids,” said Ng Choon Wee, group commercial director for Komoco Motors, which distributes Hyundai here, adding that this doubling was from the previous bidding exercise on October 18.
This was the first weekend since the Certificate of Entitlement (COE) prices fell across the board in the latest bidding exercise earlier this week.
COE premiums for bigger and more powerful cars in Category B, as well as those in Open category, fell by over 20 per cent, or between S$33,000 (RM114,000) and S$40,000, after hitting record high prices for six consecutive bidding exercises.
Open category COEs can be used for any vehicle type except motorcycles but are typically used to register large cars.
Category A premiums, for smaller cars, saw a decline of almost 10 per cent, dropping over S$10,000 to S$95,689.
Car sellers that TODAY visited or spoke to reported an increase in enquiries to varying degrees, though none revealed this directly led to better sales.
Some other dealers, particularly those dealing with second-hand cars, observed little to no significant change in interest.
At the four showrooms TODAY visited for half a day on Sunday, all nine customers who were approached said that they were still browsing.
While some said they were moved by the news about COE price drop to check out the market, they were not in a rush to make a purchase, with some saying that the dip in premiums were still not enough for them.
An increase of 20 to 30 per cent in queries
Besides Komoco Motors, some other dealers and distributors also reported a marked increase in interest among potential customers.
Polestar, an automotive company which only sells Category B electric cars, saw an uptick in appointments made with its sales consultants as well as walk-ins into its showroom along Leng Kee Road.
“(We) can't give actual numbers but (we saw) about a 20 per cent increase from the previous week,” said Adele Lee, assistant general manager for Polestar, Wearnes Automotive.
Meanwhile at CarTimes, which deals with both new and preowned cars, its chief operations officer Benjamin Loo told TODAY that the company saw a roughly 30 per cent increase in queries from the previous week, for both old and new cars.
“Customers usually come in with a certain set budget. From there, they make queries and look at all packages for both old and new cars, and then they see what they can afford,” said Loo.
“Of course for those who can afford a brand new one, or they can stretch their budgets a little, they would opt for the new one.”
None of the car sellers, however, gave indication of how the drop in COE premiums has impacted actual sales, citing commercial sensitivities.
Mixed impact for used cars
Meanwhile, Raymond Tang, managing director of Yong Lee Seng Motor which deals in pre-owned and new cars, estimated that at best, there were up to 10 to 15 per cent more enquiries from customers who were curious about how much the drop in COE premium have translated to lower prices for new cars.
However, he did not observe much change in interest for used cars and he expects that would remain the case going forward either.
He said this is because there is a used car practically for all budget levels, regardless of how first-hand car prices fluctuate.
“If you can afford it, you can buy a car with nine, eight or seven years left on (its) COE. But if those are too expensive, these buyers can then look at those with six, five, four years left and so on,” he said.
Meanwhile, other dealers said that certain used cars would be more affected than others when COE premiums for new cars drop.
Amos Wong, general manager of Autolink Holdings which deals with used cars, said that cars registered in 2022 and 2023 will be “greatly affected”.
This is because given their younger age, these cars will still be sold at relatively high prices in the second-hand market, especially as many were registered with high COE prices.
In some cases, it might cost almost the same or even cheaper to buy a brand new car given the latest COE dip, he said.
Agreeing, Neo Tiam Ting, president of the Singapore Vehicle Traders Association added: "If the COE comes down normally — not a huge decrease — it doesn’t affect the used market.
“But this time round, with a decline of S$40,000 (for Category B), for sure the used car prices have to be adjusted, or the buyers cannot accept. Especially for newer, one to two year-old vehicles,” he said.
Associate Professor Raymond Ong, a transport industry observer from the National University of Singapore, said that buyers would also look at the long-term costs to own a vehicle when deciding between buying a new or used car, beyond comparing their price tags.
What customers say
Raymond Ng, 50, who works in the service industry, currently drives an Audi Q5 — a Category B car with over seven years left in its COE.
He told TODAY outside the Hyundai showroom at Leng Kee Road that he was prompted to browse for cars this week given the significant drop in Category B premiums, though he said he was “not in a rush” to buy one anytime soon.
Meanwhile, Mohammed, 50, said he has been looking around for a Category A car in the market for some time to replace his existing car, which is about eight years old.
“But I’m very surprised to see that the prices of new cars are still very high, beyond our expectations,” said the aerospace industry professional who declined to give his full name.
"The cheapest here is about S$180,000," he said when speaking to TODAY at the Hyundai showroom, adding that it was "too expensive".
Similarly, Samuel Chan, 46, said that given his Category B car has two years left in its COE validity, “it is about time” to start thinking about a replacement.
He said there had been a good opportunity to do so in 2021 given the relatively low COE prices then, but he held back due to economic uncertainties.
While Category B premiums registered the biggest drop in the latest bidding, he maintained that he was still “looking at the opportunity to get a good deal” and not rushing into a purchase.
So far, he has visited three showrooms and might still browse around “a bit more”.
“It’s no joke. It's a huge investment, like half a HDB (flat),” said Chan, who works in the aviation sector.
How will COE prices move?
While industry players have described this week's decline in COE prices as “a major drop” and “unexpected”, they have mixed views on where premiums could head going forward.
“With this unprecedented drop and people rushing in to buy cars, we don't expect to see COE drop in the coming weeks especially with the increase in demand across the board,” said Lee of Polestar.
Meanwhile, Assoc Prof Ong noted that the drop in COE prices might have been enough to entice certain buyers.
“Now the question is, we do not know how many of these buyers are. And are they large enough (in number) to actually cause an increase in COE prices (going forward)?” he added.
Associate Professor Walter Theseira from the Singapore University of Social Sciences said that the “fairly few” COE quota available subjects the market to potential large swings in prices, adding that he was “fairly sure” premiums would bounce back for a while.
However, the transport economist noted that the market is reaching the end of the period of low COE quotas, with the Government indicating that the quota will increase significantly from the second half of 2024.
“So people should be a lot more cautious about buying now in the hopes of avoiding a price increase in the future,” said Assoc Prof Theseira. — TODAY