Published October 23, 2008

EYE ON THE ECONOMY
Big-car COE premium plunges by almost half

By SAMUEL EE
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(SINGAPORE) The COE premium for big cars plunged yesterday to almost half its value in the previous tender, driving home the weakness in the market for new cars.

A Category B certificate of entitlement (COE) for cars above 1,600cc closed at $7,589 - down a whopping $6,811 from a fortnight ago. Just six months before, this category - for larger, more expensive cars - hit a year-high of $19,501.

The last time a freak result dragged Cat B below $10,000 was in the second half of February 2007 when it settled to $6,002.

According to the boss of a Continental dealership, the latest COE bids are 'a worrying sign that we are either in recession or slipping into one fast'. Buying sentiment is very weak, he said. 'We had very little showroom traffic last weekend.'

The premiums for other vehicle categories also fell in yesterday's bidding exercise. Cat A for cars below 1,600cc sagged $2,812 to $10,989, while Cat E, the open category, shed $3,057 to $12,001.

Cat C for commercial vehicles was a significant $4,396 lower at $11,503, and Cat D for motorcycles slipped $280 to $1,609.

Some motor traders are not completely surprised by the sharp fall in premiums. An executive with a popular Japanese marque said he saw it coming because 'October has been quite a bad month so far'.



'Just imagine, there were 30 per cent less Cat C COEs, yet the premium dropped by more than $4,000,' said the executive. 'This means that not only individual buyers are holding back on their purchases, businesses are not buying too.'

The number of Cat C COEs for goods vehicles and buses was cut 30 per cent in the mid-quota year review. Yesterday's tender was the second to reflect the reduced quota.

But there is a possible silver lining in the latest COE results. Some distributors are hoping the plunge in premiums - and the resulting price cuts for new cars - will attract buyers back into their showrooms.

'If we get more people coming in to look for bargains, then things will get better,' said the executive. 'But if the results of the next COE tender are still lukewarm, then you know things are going to stay this way for a while more.