ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

The Straits Times
www.straitstimes.com
Published on Dec 20, 2012
COE premium for small cars crosses $80k mark

THE premium for cars up to 1,600cc surged to a new high at the latest certificate of entitlement (COE) tender yesterday, breaching the $80,000 mark.

The COE price for small cars rose by 4.3 per cent to $81,889, up from $78,523 two weeks ago.

Motor traders attributed the increase to strong sales by continental makes such as BMW and Mercedes Benz.

Premiums in other categories ended mixed at the last tender for the year.

Motorcycle premiums increased by 5.5 per cent to $1,701, while the COE price for cars above 1,600cc rose by 3.7 per cent to $93,501.

Open COEs, which are for any type of vehicle but often end up used for bigger cars, dipped by 1per cent to $95,990. Premiums for commercial vehicle COEs also fell by 1.3 per cent to $62,201.

Motor traders said the results indicate that dealerships have ready orders in hand. Many are moving in now as the next tender will take place in three weeks' time, instead of the usual two-week gap.

In addition, there are only two more tenders before the next six-month COE quota starts in February. Premiums are expected to rise even further then due to an expected cut in COE supply.

Singapore Vehicle Traders Association secretary Raymond Tang expects prices for small cars to hover around the current mark for a while.

COE premiums for large cars and the open category are also unlikely to breach the $100,000 mark before March unless deregistration figures for this month are very low, he added.

He said COE premiums are likely to continue moving up until about 2015, when more vehicles are due to be scrapped.

COEs, which give buyers the right to purchase a car, enable the Government to control the growth of the vehicle population and road congestion.

ROYSTON SIM

80k for the right to drive on the road. I fall into a middle class family, that will be like 3-4 years of savings just to buy the COE, not even talking about the car itself.. hmm who's driving the upward trend of the COE?

(20-12-2012, 09:13 AM)safetyfirst Wrote: [ -> ]80k for the right to drive on the road. I fall into a middle class family, that will be like 3-4 years of savings just to buy the COE, not even talking about the car itself.. hmm who's driving the upward trend of the COE?

That is why most people (if not all) take up a car loan to finance their purchase. Interestingly, we are allowed to finance the COE but not the COV when buying property. This does tell me the Government's stance on cars versus property - leverage all you want for cars but you better cough up cold hard cash for property.

If you look at the $0 down-payment and 10-year allowable loan tenure for car loans, it is no wonder that demand for cars remains strong. Many may be quietly bleeding to death while still driving that spanking new car around.....

At this rate, who will pay for the piece of expensive paper and not drive the car? If buy, sure drive, it's means "doubly taxed" -COE for ownership, and ERP for road usage. So which (I doubt it's both) components help to alleviate road congestion? And does higher income for the transport ministry translates to more funds spend on improving the transport system? (ironically, if public transportation improves, some may not see the need to own cars. Then less income for the gahment)

(20-12-2012, 05:46 PM)violinist Wrote: [ -> ]At this rate, who will pay for the piece of expensive paper and not drive the car? If buy, sure drive, it's means "doubly taxed" -COE for ownership, and ERP for road usage. So which (I doubt it's both) components help to alleviate road congestion? And does higher income for the transport ministry translates to more funds spend on improving the transport system? (ironically, if public transportation improves, some may not see the need to own cars. Then less income for the gahment)

Both COE and ERP do help to alleviate road congestion, IMO

COE make car ownership a limited resource (i.e. limited car population), thus alleviate road congestion.

ERP make road usage during peak hour more expensive. It will encourage drivers to avoid peak hour, thus alleviate road congestion

make sense?

COE means only the rich can own cars, and since they are paying a hefty $80k on the piece of paper, might as well get a bigger or posher car. Hence all the expensive cars and gas guzzling SUVs, etc.

ERP, while I can agree that it controls congestion to some extend, a lot of it has got to do the design of the roads. As a lot of Yishuners who works in town say, "On the CTE, you queue up to pay money."

Land prices has a reserved price and requires a minimum bid, hence there is a floor to what an apartment will cost here.
There is no minimum bid for the COE and the public decides how much to pay for it.
Don't have an issue here except for the Vans and Lorries, which will increase business cost.
Couple that with high property prices and the costs combined will kill off many start-ups.
It ended before it could begin. For an economy to thrive, start-ups are needed as well as strong independent local companies.

(21-12-2012, 02:06 AM)Big Toe Wrote: [ -> ]Don't have an issue here except for the Vans and Lorries, which will increase business cost.
Couple that with high property prices and the costs combined will kill off many start-ups.
It ended before it could begin. For an economy to thrive, start-ups are needed as well as strong independent local companies.

If you are a start-up trying to cut costs, you will go and buy a NEW van because a SECOND-HAND one just will not do? Somehow that kind of logic is overwhelming to me.

Though i have said it before, i think it is worth to repeat what some China man think of our "COE" policy. They says, "Coe policy is a practice which is more "Pa Tau" (you got no say at all) then the practice by the communists in Peking. You see even the China man laughing at us, Sink aporeans.
Ha! Ha! i am laughing too. i mean i am crying "inside"

(21-12-2012, 12:45 AM)violinist Wrote: [ -> ]COE means only the rich can own cars, and since they are paying a hefty $80k on the piece of paper, might as well get a bigger or posher car. Hence all the expensive cars and gas guzzling SUVs, etc.

ERP, while I can agree that it controls congestion to some extend, a lot of it has got to do the design of the roads. As a lot of Yishuners who works in town say, "On the CTE, you queue up to pay money."

Hmm, it means the ERP in CTE is not expansive enough...

I knew people driving to work via CTE early in the morning to avoid ERP. Not too bad a habit and save money too.