The Straits Times
www.straitstimes.com
Published on Jan 10, 2013
COE price for small cars hits new high of $92,100
It soars by more than $10,000 and is close to bigger cars' premium
By Christopher Tan Senior Correspondent
THE COE premium for small cars shot up by more than $10,000 to reach a new high of $92,100 at the latest tender yesterday.
The new rate for cars up to 1,600cc is 12.5 per cent higher than its previous level of $81,889.
It is also close to the Certificate of Entitlement (COE) cost for cars above 1,600cc, which ended at $96,210 - 2.9 per cent higher than before.
The Open COE - usually used for bigger cars - was $96,101 or 0.1 per cent higher.
Traders linked the price escalation of COEs, which are needed for vehicle ownership, mainly to the launch of the new VW Golf 1.4 and imminent introduction of a 1.6-litre variant of the BMW 3-series.
BMW agent Performance Motors is said to have already collected close to 100 bookings for the 3-series 1.6, while Volkswagen Singapore was said to have sold more than 100 Golfs last weekend.
But VW Singapore general manager of sales Daniel Chong noted that many car buyers are also aware of an impending cut in COE supply from next month.
"As a result, there has been an increase in new car bookings over the last few weeks," he said.
The next six-month COE quota is expected to dip sharply because of a lower growth rate allowed by the Government and fewer cars scrapped in the preceding six months.
Last year's allotment was already a massive drop from before. That fuelled an unabated rise in premiums.
Despite yesterday's surge in small-car COE prices, motor traders were not entirely surprised.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the premium could even overtake that for bigger cars and reach $100,000.
He noted that the introduction of the Carbon Emissions-based Vehicle Scheme (CEVS), which offers tax rebates to cars with low emissions, is contributing to "more and more cars" crowding the small-car COE category.
Smaller cars tend to be less pollutive and many stand to benefit from the scheme.
"Ironically, this will only push up prices, and whatever tax rebate one gets is eventually thrown back into the system," he added.
The 3-series 1.6 and new Golf 1.4 qualify for carbon-emission rebates of $10,000 and $15,000 respectively.
Performance Motors managing director Say Kwee Neng expects the premium for small and big cars to "go neck and neck" in the coming months.
Traders also attributed yesterday's results to a longer interval between the tender and the last one, which created a bigger backlog of orders.
The latest results have made budget cars even less viable. They cannot compete with premium models whose sellers and buyers have fatter margins and deeper pockets.
Take the Toyota Corolla 1.6 and Mercedes C180 1.6. Their cost prices are about $14,800 and $30,500 respectively. Their retail prices start from around $125,000 and $188,000 respectively.
After taxes and COE - at the previous premium of $81,889 - the gross profit margin of the Toyota works out to around $11,000 while that for the Merc is $39,000.
So, even after salesman commission and freebies to customers, it is clear which dealer can bid higher for COE.
Motorcyclists were not spared yesterday. The two-wheeler COE ended 13.6 per cent higher at $1,933.
Commercial-vehicle COE was the only one bucking the trend, with the price dipping 3.5 per cent to close at $60,000. Traders said the COE supply for vans, trucks and buses will expand in the next six-month quota.
christan@sph.com.sg
