Business Times - 04 Aug 2011
COE premiums fall across the board
By SAMUEL EE
PASSENGER car COE premiums have softened from the highs hit in the previous bidding exercise as interest in new cars plunged over the past fortnight, according to some motor distributors.
In yesterday's tender, a certificate of entitlement for Category A (cars below 1,600cc) dropped $7,201 to $48,801, while Cat B (for cars above 1,600cc) slipped $1,611 to $70,890.
Cat E - the open category which is generally used to register Cat B cars - shed $4,373 to $70,117.
Meanwhile, Cat C (for goods vehicles) and Cat D (for motorcycles) also dipped; they were down $493 to $34,009, and $122 lower at $1,890 respectively.
One observer speculated that the only reason the correction in the Cat B premium was not greater was the smaller quota of such COEs.
For the next six months, the number of Cat B COEs will be 17 per cent less than in the preceding half-year period.
But generally, the crowds have disappeared.
'Walk-in traffic over the past two weeks has been bad,' said the general manager of a premium dealership.
'Ours dropped 30 per cent but I think some of the Japanese brands saw only half their usual crowd.'
He added that sales were 'worse'. 'Sentiment is really poor. A lot of people are not ready to spend at the moment.
'They seem to be worried not so much about the local situation but about global economic problems, like the financial troubles of the US and Europe,' he explained.
He said prospective customers are now taking a longer time to sign on the dotted line.
'They are now looking at every dollar and every detail before they close the deal. They are being extra careful these days.'
Looking ahead, he is hoping that the across- the-board fall in premiums yesterday will bring back some customers.
'Expect more aggressive promotions in the next two weeks as distributors take the opportunity to fill their order books,' he said.
Hmm... Consumer sentiment leading indicator?
The Straits Times
Aug 18, 2011
COE prices hit by stock market woes
Dips in 3 categories as buyers stay away, but taxi operators drive up Category A premiums
VOLATILITY in stock market prices has put the brakes on buying interest in cars, with certificate of entitlement (COE) premiums ending mixed at the latest tender yesterday.
There were dips in three categories and increases in two.
The largest change was in Category B (for cars above 1,600cc), where the premium fell by $5,369, or 7.6 per cent, to $65,521.
The cost of Open COEs, which can be used for any vehicle type but usually end up for bigger cars, rolled back $3,117, or 4.4 per cent, to $67,000.
Motor traders said the dips reflected poor market sentiment, which stemmed from the pummelling suffered by stock markets worldwide in recent weeks. Showrooms have been quiet, with consumers holding off and adopting a wait-and-see attitude, they noted.
But premiums for Category A (cars up to 1,600cc and taxis) defied traders' expectations to rise slightly - by $500, or 1 per cent, to $49,301.
As with the first bidding exercise this month, taxi operators drove up the premium in this category.
Taxi companies submitted 355 bids, of which 232 were successful - accounting for more than 40 per cent of the winning bids in that category.
Comfort DelGro, the largest taxi operator here, submitted 100 bids in the last 15 minutes and had 90 accepted. SMRT, TransCab and Premier Taxis also secured certificates.
'The taxi companies were very significant,' said Mr Ron Lim, general manager of Nissan agent Tan Chong Motor.
Motor dealers had expected Category A COEs to drop to about $45,000 or $46,000 due to buyers staying away from the showrooms, he added.
The COE price for commercial vehicles finished $1,720 or 5 per cent lower at $32,289, while the motorcycle premium rose by $109 or 5.8 per cent to $1,999.
Looking ahead, Mr Lim said: 'If the financial markets can stabilise, people will settle down and are likely to start buying again.'
Should that happen, premiums would likely head north at the next bidding exercise in three weeks' time, he added.
He noted that demand for cars up to 1,600cc has already hit a bump so the chances of further drops are 'very slim'.
COEs, which give one the right to buy a car, are central to Singapore's vehicle quota system which enables the Government to control the growth of the vehicle population and road congestion.
ROYSTON SIM
The Straits Times
Sep 8, 2011
Economic outlook dampens COE bidding
CERTIFICATES of entitlement (COEs), which people must secure at regular auctions before they can own a vehicle, ended mixed at the latest tender yesterday as economic uncertainties put buyers in a cautious mood.
COEs for cars up to 1,600cc closed 3.4 per cent higher at $51,000, while the COE for cars above 1,600cc finished 3.8 per cent lower at $63,002 - its fourth consecutive drop.
Open COEs, which can be used to register any vehicle type but are usually used for bigger passenger cars, ended 2.1 per cent lower at $65,589.
The commercial vehicle premium dipped by 1.2 per cent to close at $31,900, as businesses held back on fleet renewal in the light of the gloomy economic outlook.
Observers said that if not for bids from taxi operators, the COE for cars up to 1,600cc might have ended lower too. There were nearly 200 taxi bids, amounting to about one quarter of the 794 bids received.
Most of them were unsuccessful, a sign that taxi firms were also bidding cautiously.
Volkswagen Group Singapore managing director Zeno Kerschbaumer said yesterday's results were 'a clear reflection of consumer sentiment'.
'The market is weak because of the overall economic environment,' Mr Kerschbaumer said. 'You may say Cat A (cars up to 1,600cc) was higher, but that was merely a technical adjustment. Two months ago, it was much higher.'
He said the gloomier sentiment is evident in the showroom, and he does not expect the market 'to revive any time soon'.
Mr Teo Hock Seng, managing director of Hyundai distributor Komoco Motors, concurred.
'Stock prices are down, property prices are down, and there may be a credit squeeze,' he said. 'People are not that keen to buy cars in such circumstances. Those who buy are not rushing - they're really taking their time.'
COEs for motorcycles bucked the downtrend in the four-wheeler market, though. The premium for bikes and scooters shot up by 17 per cent to $2,339.
CHRISTOPHER TAN
The Straits Times
Sep 22, 2011
Most COE prices lower amid gloomy outlook
CERTIFICATES of entitlement (COE), which vehicle buyers have to secure at regular auctions, ended mostly lower yesterday as a gloomy economic front continued to dampen consumer sentiment.
COEs for cars up to 1,600cc and taxis ended at $48,006, down 5.9 per cent on the price two weeks ago. If not for taxi companies submitting a barrage of bids in the final minutes before the tender closed at 4pm, the premium could have closed at $20,000 or so.
About 40 per cent of the 951 bids submitted were from cab companies. Among them, SMRT and Premier succeeded in securing some of the COEs they bid for, while Trans-Cab managed to get every one it vied for.
COEs for cars above 1,600cc closed 3per cent higher at $64,889. It was the only one that bucked the downward trend yesterday.
Open COEs, which can be used for any vehicle type but end up being used mainly for cars, dropped 4.7 per cent to close at $62,502 - the lowest level since June.
Commercial vehicle premiums fell for the fourth consecutive tender to end at $30,089 - 5.7 per cent lower than its previous close.
Motorcycle COEs took the biggest tumble, falling 9.8 per cent to $2,109.
Industry players and traders said the market has been spooked by reports of the European and United States debt crises, as well as forecasts of lower growth in the region and at home.
'The overall drop is not too surprising,' said Motor Traders Association vice-president Michael Wong. 'Showroom inquiries have stayed very low. There's a lot of uncertainty out there.'
He said commercial vehicle customers are most affected by the prospect of a business downturn, and are holding back on fleet purchases.
Traders noted that recent press reports that the COE supply could expand from 2013 may have also persuaded buyers of mass market cars to wait and see.
The luxury segment remains relatively buoyant, even if premiums have fallen from recent highs of $70,000-plus. The top two selling cars in the first eight months of the year were the BMW 5-series and the Mercedes-Benz E-class.
CHRISTOPHER TAN
The Straits Times
Oct 6, 2011
No wild spikes in COE prices
CERTIFICATE of entitlement (COE) prices finished mostly higher at the latest tender yesterday.
But there were no wild spikes despite the prospect of a smaller supply of certificates - which vehicle buyers must secure at regular auctions - in the new year.
COE prices for cars up to 1,600cc ended 4.8 per cent higher at $50,289, fuelled once again by bids from taxi companies.
Taxi firms accounted for more than a quarter of the 793 bids submitted in this category.
The COE price for cars above 1,600cc was 2per cent lower at $63,600, despite BMW agent Performance Motors - the biggest player in this category - reporting a strong response to promotions for its 5- and 7-series models.
Prices for the open COE, which can be used for any vehicle type but ends up being used mainly for cars, closed 4.1 per cent higher at $65,058.
Elsewhere, the commercial vehicle premium posted the biggest jump of 9 per cent, to $32,801.
But the motorcycle COE price dipped by 1.5 per cent to close at $2,078.
Transport Minister Lui Tuck Yew said on Monday that the Government will further tighten controls on the vehicle population.
He said the current 1.5 per cent annual growth ceiling, which he described as unsustainable, will be lowered from the next COE quota year, starting in February.
Motor traders reckon the cut will translate to an all-time low supply of COEs next year. But consumers seem unsure.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said: 'Most private car buyers need time to digest the news. They are probably waiting for the actual number of COEs to be announced.
'The businesses, however, are reacting faster. Many are taking the view that they should buy now, or risk higher prices next year.'
Motor traders said the battered stock market and gloomy economic outlook may be a more immediate dampener on consumers' appetite for cars, especially the bigger models.
However, they said the increase in the open COE price reflects where the market is headed in the coming tenders.
CHRISTOPHER TAN
Business Times - 20 Oct 2011
Big car COE premiums at 17-year high
Other categories also surgeafter news of vehicle growth-rate cut
By SAMUEL EE
(SINGAPORE) The big car COE premium jumped to a 17-year high as both buyers and dealers rushed to secure certificates of entitlement after news last week that the government will reduce the annual vehicle growth allowed.
Category B - for cars above 1,600cc - jumped $12,289 to $75,889. The last time a similar COE category was higher was in September 1994 during an economic boom. The small car COE premium also surged; Cat A - for cars below 1,600cc - rose $5,823 to $56,112. And in a sign that dealers were also actively stocking up on COEs because they expect premiums to be on the uptrend, Cat E - the open category - climbed $8,542 to $73,600. Unlike Cat A and B, a Cat E COE can be immediately transferred.
Elsewhere, Cat C - for goods vehicles - increased $4,210 to $37,011, while Cat D - for motorcycles - was up $13 to $2,091.
Last Friday, the Land Transport Authority (LTA) announced that the annual vehicle population growth rate will be cut from the current 1.5 per cent to 1.0 per cent in 2012, and then to 0.5 per cent in 2013 and 2014. For quota year 2012, the per annum growth rate of the first half - February 2012 to July 2012 - will actually be unchanged at 1.5 per cent.
But as the second half - August 2012 to January 2013 - will fall to 0.5 per cent, the per annum growth rate is 1.0 per cent.
Some auto distributors in the prime Leng Kee Road motor belt reported higher sales after the announcement. The dealer of one premium make said orders increased by 30 per cent last weekend.
'Those who had been sitting on the fence made up their minds to buy straight away, while the rest were just kiasu,' he said, using a local term to refer to those who are afraid of losing out. He added that the arrival of new models such as the latest Audi A6 may have also contributed to the higher premiums.
'Whatever the reason, there was definitely more eagerness to get a COE sooner rather than later,' he said.
Business Times - 09 Nov 2011
Smoothing the bumps in the COE system
Motor traders address issues in current system, submit paper to ministry
By SAMUEL EE
(SINGAPORE) The Motor Traders Association of Singapore (MTA) has given its take on COEs and the Vehicle Quota System (VQS) to the government, saying that the current format spells 'feast or famine' for traders.
MTA president Cheah Kim Teck says that car distributors accept that the VQS is here to stay, and that they 'respect the idea of managing congestion'.
'In a way, we cannot expect more COEs,' he says, referring to certificates of entitlement which are required for registering new cars. 'But all we are asking is, is there any other way to skin this cat?'
The COE quota has been reduced significantly over the past three years and this has affected vehicle sales by MTA members. Most of Singapore's authorised car distributors belong to the MTA.
The COE quota is largely based on vehicle deregistrations, which Mr Cheah expects to shoot up in 3-4 years' time when a potential 200,000 cars reach scrappable age - thus expanding the COE quota.
He says that when these new COEs come onstream, distributors will grow their business to meet the new demand, only to scale back and retrench staff when the quota is cut later.
'So it's feast or famine if we continue with this replacement method,' he says. 'But if we can smoothen it out, we will have a steady market and avoid the peaks and troughs.'
In the paper to the Ministry of Transport, which MTA co-wrote with National University of Singapore professor Lee Der-Horng, the first issue highlights VQS fluctuations and one section, among others, looks at the cap on the annual vehicle population growth rate.
The rate will be cut from the current 1.5 per cent for the first half of quota year 2012 to 0.5 per cent for the second half.
The MTA paper asks whether there is an urgent need to lower the rate, given that proposed road works - such as the upgrading of the Outer Ring Road System, the construction of the 3.6 km Marina Coastal Expressway and road widening of the Central Expressway - would lead to the road network capacity increasing by more than the time-averaged 0.5 per cent growth as stated by the Land Transport Authority.
The second issue concerns the merging of COE Categories A, B and E, and applying ad valorem bidding.
The separate categories were created so as to serve different customer segments with varying price sensitivities and purchasing powers. But the MTA says that empirical evidence has shown that the VQS categorisation may not always be effective in achieving this stated equity objective because in practice, buyers of small cars, ie Cat A, have been paying more in relative and sometimes absolute terms compared with buyers of the more expensive Cat B cars.
As for implementing an ad valorem bidding scheme where bids are the percentages of the Open Market Values (OMV) of the cars, the argument is that buyers of larger cars will always pay a higher absolute amount of COE premium regardless of the economic conditions.
But MTA points out that a potential loophole of this scheme is possible - under- declaration of OMV by unscrupulous car importers.
The third issue that the MTA brought up in the paper relates to taxis, which have been blamed for pushing up Cat A premiums.
Instead of recommending that a separate COE category be created for them (to avoid the possibility of collusion among the seven taxi companies), the MTA proposes that the PQP, or prevailing quota premium, be paid for new taxis amounting to a ceiling of 3 per cent of their current fleet size.
This figure is chosen to reflect the average year- on-year growth rate of the taxi population from 2000 to 2010.
The final issue raised by the MTA concerns the creation of a COE category for green vehicles to reduce the upfront costs of green vehicles and encourage greater public adoption of these less pollutive vehicles.
This is because even with the current GVR or green vehicle rebate, the MTA says, a hybrid version still costs more than its conventional petrol-engined variant.
'The whole subject of COE seems to be a sacred cow,' says Mr Cheah. 'But we thought that after the general elections, the mood is right to bring it up because we need to be consultative and hear everybody out to make this a better place.'
The Straits Times
Nov 10, 2011
COE prices mostly up, big cars highest in 2011
By Christopher Tan
The rush to meet annual sales targets and anticipation of fewer certificates of entitlement (COE) next year conspired to send most COE prices higher in the latest tender on Thursday.
COE prices for cars up to 1,600cc ended at $55,997, down slightly from $56,112 three weeks ago. COE prices for cars above 1,600cc finished at $77,000, up from $75,889. The COE prices for cars more than 1,600cc and in the Open category are the highest in 2011.
Open COE, which can be used to register any type of vehicle but ends up mainly for cars, shot up to $78,001 - from $73,600 previously.
The rate for commercial vehicles shot up to post a new record of $40,803, from $37,011.
Motorcycle premiums slipped from $2,091 to close at $2,012.
The Government announced in October that the 1.5 per cent annual allowable growth rate in vehicle population will be cut to 0.5 per cent from August 2012. This is expected to result in a markedly smaller supply of COEs, which in turn will mean higher premiums.
Business Times - 11 Nov 2011
Big car COE premium continues to rise
By SAMUEL EE
THE COE premium for big cars continued to surge to a level not seen since the late 1990s but the small car category stayed flat in yesterday's first bidding exercise of November.
A Category A certificate of entitlement - for cars 1,600cc and below - slipped $115 to $55,997, while Cat B - for cars above 1,600cc - climbed $1,111 to $77,000.
Cat E - the open category which currently tracks Cat B - jumped $4,401 to $78,001. Meanwhile, Cat C - for goods vehicles - soared $3,792 to $40,803 but Cat D - for motorcycles - shed $79 to $2,012.
Some motor distributors were not surprised by Cat B's rise. 'It's been three weekends since the last tender,' said a senior executive at a large dealership. 'It's not so much about demand, it's about timing.'
The usual interval between bidding exercises is two weeks. With an extra week, dealers would generally have more orders in hand. This is especially so for the more expensive models in Cat B.
'There is still steady demand for Cat B cars in general and luxury models in particular,' said the executive.
Over at Kia, for example, the Korean mass-market brand is still seeing firm demand although the customer profile has changed, said Chin Kee Min, senior manager for Cycle & Carriage Kia.
'Our customers are comfortable with the current pricing,' said Mr Chin. 'They are not downgraders. The type of customer has changed because of affordability.'
But demand for smaller cars still remains weak because of the high premiums. The boss of a mid- sized dealership said most of the Cat A players in the market have been having a hard time.
'Only those with attractive promotions have been able to drum up some business,' he said. He added that taxi operators did not bid for any Cat A COEs yesterday.
'The premium is too high,' he said. 'Anyway, at this stage, they are probably already where they want to be in terms of fleet size.'