By Lin Jiamei | Posted: 24 March 2010 1721 hrs
SINGAPORE : COE prices have shot up by as much as S$14,000 in the latest bidding exercise.
The market appears to be reacting to an expected reduction in the supply of COEs next month.
The market has been bracing for the prices of COEs to head north, but what it did not expect was the size of the jump in just one bidding exercise.
The biggest increase was in the Open category, where the premium closed at S$42,001, an increase of S$14,411.
The COE for big cars also saw a significant jump. It rose S$9,700 to S$36,089. For small cars, the new premium stood at S$28,389 - up S$7,587.
In other categories, the COE for commercial vehicles climbed S$5,889 to close at S$32,890, while premiums for motorcycles went up S$41 to S$1,200.
Car dealers MediaCorp spoke to did not expect this wave of increases to be so big.
Chin Kee Min, senior manager, KIA Motors, said: "(I was) a bit taken aback, but in all honesty, if it does not come now, it will come later, so it is a matter of time. I think it is mainly a knee-jerk reaction... it is a self-fulfilling prophecy.
"When you expect the prices next round to increase, you will actually see it this round. Since it did happen this round, so the next round we are not expecting as huge a jump as what we see now. Not only is the public worried, the car distributors are also worried that they may not be able to circulate the COEs."
This is the latest COE bidding for this quota year. From next month, a new quota system will kick in, whereby the number of COEs available will be determined by the actual number of cars de-registered. This means fewer COEs and higher prices.
But car dealers MediaCorp spoke to said they do not expect the jump in the COE prices next month to be as drastic as what they have seen this time round.
They expect to raise car prices by another 20 to 30 per cent, with higher COE prices and a supply cut.
And as new cars become more expensive, second-hand cars may be a more popular option. One second-hand car dealer said he has seen a 10 per cent increase in sales since the COE supply cut was announced.
Raymond Tang, Yong Lee Seng Motors Pte Ltd, said: "For used cars, I think at the moment, the increase will still be there, maybe around S$3,000 to S$5,000 expected. The prices for used cars are still quite moderate, still very far away from a new car, so I feel that the prices are still very stable. So even if they increase by S$3,000 to S$5,000, it is still a very big gap."
There will be 4,238 COEs available in the next bidding exercise and dealers said high COE prices are here to stay. - CNA/ms
The market appears to be reacting to an expected reduction in the supply of COEs next month.
The market has been bracing for the prices of COEs to head north, but what it did not expect was the size of the jump in just one bidding exercise.
The biggest increase was in the Open category, where the premium closed at S$42,001, an increase of S$14,411.
The COE for big cars also saw a significant jump. It rose S$9,700 to S$36,089. For small cars, the new premium stood at S$28,389 - up S$7,587.
In other categories, the COE for commercial vehicles climbed S$5,889 to close at S$32,890, while premiums for motorcycles went up S$41 to S$1,200.
Car dealers MediaCorp spoke to did not expect this wave of increases to be so big.
Chin Kee Min, senior manager, KIA Motors, said: "(I was) a bit taken aback, but in all honesty, if it does not come now, it will come later, so it is a matter of time. I think it is mainly a knee-jerk reaction... it is a self-fulfilling prophecy.
"When you expect the prices next round to increase, you will actually see it this round. Since it did happen this round, so the next round we are not expecting as huge a jump as what we see now. Not only is the public worried, the car distributors are also worried that they may not be able to circulate the COEs."
This is the latest COE bidding for this quota year. From next month, a new quota system will kick in, whereby the number of COEs available will be determined by the actual number of cars de-registered. This means fewer COEs and higher prices.
But car dealers MediaCorp spoke to said they do not expect the jump in the COE prices next month to be as drastic as what they have seen this time round.
They expect to raise car prices by another 20 to 30 per cent, with higher COE prices and a supply cut.
And as new cars become more expensive, second-hand cars may be a more popular option. One second-hand car dealer said he has seen a 10 per cent increase in sales since the COE supply cut was announced.
Raymond Tang, Yong Lee Seng Motors Pte Ltd, said: "For used cars, I think at the moment, the increase will still be there, maybe around S$3,000 to S$5,000 expected. The prices for used cars are still quite moderate, still very far away from a new car, so I feel that the prices are still very stable. So even if they increase by S$3,000 to S$5,000, it is still a very big gap."
There will be 4,238 COEs available in the next bidding exercise and dealers said high COE prices are here to stay. - CNA/ms
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