Less cars on the road as COEs play catch-up
26 Feb 2015|8,698 views
According to The Straits Times, Singapore's private car population has fallen to its lowest level since 2011, and the shrinkage could continue as the latest available figures from the Land Transport Authority show that there were 598,219 cars as of the end of last month - down from 600,176 last year. The car population is now at its lowest since 2011, when there were 592,361 cars on the road.
The shrinkage is a rare occurrence in Singapore, where a quota system allows the vehicle population to grow annually at a pre-determined rate. Observers said the contraction is a sign that the supply of Certificates of Entitlement (COEs) is lagging behind actual replacement demand.
Since 2010, COE supply has been formulated largely by the number of cars scrapped in the preceding months. This often does not correspond with the number of cars scrapped in the following months. For instance, last year's May-July COE quota for cars was determined by the 7,083 cars scrapped from February to April. But actual scrappage from May to July was higher at 7,514.
Over time, this leads to a population shrinkage. Mr. Lee Hoe Lone, Managing Director at Audi agent Premium Automobiles, said, "It will be worse if they start holding back some COEs." He was referring to a widely expected move by the Government to 'save' some COEs arising from the 2015-17 supply bonanza for the next low-supply period starting from 2019.
National University of Singapore transport researcher Lee Der Horng concurs, adding that "a more equalised COE supply between years is more healthy".
While motor traders agree that a peak-and-trough COE supply pattern is not desirable, they reckon an adjustment - by holding back some certificates - will not be well-received by consumers who have been waiting for supply to surge. "If they hold back 30 percent of next year's supply, it could potentially mean 30,000 car-owning families giving up their cars," a trader said.
But even if COE supplies are not tweaked, the car population is likely to shrink for a few more years if the current COE quota formula is not changed.
According to The Straits Times, Singapore's private car population has fallen to its lowest level since 2011, and the shrinkage could continue as the latest available figures from the Land Transport Authority show that there were 598,219 cars as of the end of last month - down from 600,176 last year. The car population is now at its lowest since 2011, when there were 592,361 cars on the road.
The shrinkage is a rare occurrence in Singapore, where a quota system allows the vehicle population to grow annually at a pre-determined rate. Observers said the contraction is a sign that the supply of Certificates of Entitlement (COEs) is lagging behind actual replacement demand.
Since 2010, COE supply has been formulated largely by the number of cars scrapped in the preceding months. This often does not correspond with the number of cars scrapped in the following months. For instance, last year's May-July COE quota for cars was determined by the 7,083 cars scrapped from February to April. But actual scrappage from May to July was higher at 7,514.
Over time, this leads to a population shrinkage. Mr. Lee Hoe Lone, Managing Director at Audi agent Premium Automobiles, said, "It will be worse if they start holding back some COEs." He was referring to a widely expected move by the Government to 'save' some COEs arising from the 2015-17 supply bonanza for the next low-supply period starting from 2019.
National University of Singapore transport researcher Lee Der Horng concurs, adding that "a more equalised COE supply between years is more healthy".
While motor traders agree that a peak-and-trough COE supply pattern is not desirable, they reckon an adjustment - by holding back some certificates - will not be well-received by consumers who have been waiting for supply to surge. "If they hold back 30 percent of next year's supply, it could potentially mean 30,000 car-owning families giving up their cars," a trader said.
But even if COE supplies are not tweaked, the car population is likely to shrink for a few more years if the current COE quota formula is not changed.
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