SINGAPORE: While the tills are not ringing just yet, car dealers are reporting an uptick in interest, one day after Certificate of Entitlement (COE) prices fell across the board.
At the latest tender exercise that closed on Wednesday (Nov 8), premiums for all types of vehicles dropped. The Category B price – for larger and more powerful cars – plunged by 26.7 per cent, falling S$40,000 (US$29,500) from S$150,001 to S$110,001.
Dealers told CNA this was larger than expected.
Open Category COEs, which can be used for any vehicle type but end up being used mainly for large cars, also saw a significant drop, with premiums falling by 20.9 per cent to S$125,011 from S$158,004.
For Category A cars, or those 1,600cc and below with horsepower not exceeding 130bhp, premiums closed at S$95,689, down from S$106,000 in the last exercise.
Car dealers told CNA they saw a 20 to 30 per cent increase in the number of enquiries, with many looking for pricing information on Category B cars.
Managing director of Cars & Stars Jesse Tan said he had expected COE to fall but not by this much. Cars & Stars deals in both old and new cars, covering brands like Toyota, Honda, Mercedes Benz and Porsche.
He plans to lower prices across the board, adjusting for estimated COE prices of between S$110,000 to S$125,000 for Category B at the next round of bidding, based on this exercise.
“I think people will rush in, because this drop is really not expected and it’s very attractive. Everyone who is on the sidelines waiting will definitely come in,” he added.
While the drop in Category A prices was less significant, Mr Tan said it was still a “pretty good discount” that would make a difference for consumers with smaller budgets.
Similarly, those who had previously only considered smaller cars may now set their sights on pricier Category B vehicles, said Mr Tan.
Describing it as a “knee-jerk effect”, Mr Jeffrey Low, a consultant in the automotive industry, said that many consumers are calling to check on prices for Category B cars.
The drop in Category B COE prices will attract those eyeing electric vehicles, many of which fall into this category, he added.
“For those who were looking at Category A, they will move to Category B, since during this round the difference was so small, about S$15,000. They will consider it, for electric vehicles especially.”
Despite the reported surge in enquiries, most showrooms were empty when CNA visited the Leng Kee and Ubi areas this afternoon. Dealers and sales assistants there said they expect more visitors over the weekend.
One sales manager at a Leng Kee showroom said the dealership is expecting “strong demand” over the weekend and is preparing for many walk-ins. He revealed that many dealers are still trying to decide on pricing.
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COEs for commercial vehicles, which include goods vehicles and buses, fell to S$78,001 from S$84,790, while motorcycle premiums closed at S$10,889, down from S$11,201 in the last exercise.
A total of 3,133 bids were received, with a quota of 2,411 COEs available.
The Land Transport Authority (LTA) announced last week that the COE quota for the November 2023 to January 2024 quarter would be increased further.
An additional 1,614 Category A, B and C COEs were reallocated, on top of the 1,895 reallocated COEs announced last month.
This brought the total supply of COEs for the quarter to 14,388.
With the big drop in COE prices, customers who bought their cars earlier may be eligible for rebates, especially those who booked Category B cars, dealers said.
Mr Aaron Kek, a sales manager for Leco Auto, told CNA that different dealers have different approaches when it comes to pricing. Leco Auto deals in both old cars and new Toyota, Honda and Mercedes Benz cars.
Some dealers may sell cars with a guaranteed COE, and customers may not get any money back even if the eventual COE price drops, he added.
Other dealers like himself may sell a car with a guaranteed COE pegged slightly lower than the price of the previous bidding exercise. For example, since Category B COE prices closed at S$158,004 in the previous exercise, the “rebate level” for those who recently bought cars could be pegged at about S$140,000.
Given that the price of Category B COE is now S$110,001, customers who are eligible for the rebate might get about S$30,000 back, said Mr Kek.
Consumers may also wait and see if COE prices will drop further, said Mr Arthur Wong, managing director of ACM automobiles, which carries cars from BMW, Audi, Mercedes Benz and Suzuki.
“When it’s a downtrend, people are keen but they want to see if it will drop more. But if it’s a slight uptrend, most of the time more people are willing to buy,” he added.
This is because if COE prices are increasing, buyers feel compelled to lock in their purchase at the lowest price possible, said Mr Wong.
Group CEO of online car marketplace Carro Aaron Tan said that while demand for used cars has remained largely flat, there has been a 20 to 25 per cent increase in people interested in selling their cars.
“I think we will start to see demand picking up after one or two more exercises,” he said, adding that second-hand sellers may increase their asking price to mitigate further falls in COE premiums.
Mr Tan expects Category A price to go down even more: “Then what will very likely happen is that people will jump in to buy new cars, versus a used car.”