COE premiums expected to increase despite larger quota

The Business Times reported that higher demand could push Certificate Of Entitlement (COE) premiums up today despite the new and bigger COE quota for passenger cars. But news of the increase in COE supply does not seem to have benefited everyone in the car market, and only those manufacturers with stronger brand equity and a newer range of models are enjoying better business.

After the announcement nearly three weeks ago that the November 2014 to January 2015 COE quota will expand by 5.3 percent, showrooms of some popular brands have been busier while others remained relatively quiet.

"The underlying demand is very strong and it will be tough for the Cat A premium to drop even though there are more COEs," said the managing director of a popular Japanese dealership. "The best-case scenario is that it will remain the same because there are now more COEs to absorb the increased demand," he added.

Today's COE bidding exercise is the first for the November 2014 to January 2015 quota, with 22.1 percent more Category A COEs - for cars below 1,600cc or 130bhp - compared to the previous August to October 2014 quota; 12.7 percent extra Cat B COEs for cars above 1,600cc and 130bhp; and a 10.3 percent increase in open category Cat E COEs.

According to the business daily, Cat A premiums may either stay roughly where they are or inch up a couple of thousand dollars because of the relatively high COE rebate offered by some dealers. At Hyundai, for example, the rebate is set at S$60,000, compared with S$56,000 at Toyota.

But while a marginal movement in Cat A is expected, a bigger increase could be in store for Cat B due to a slew of new and well-priced Cat B Japanese models, such as the Nissan Qashqai, Nissan X-Trail and Honda Odyssey.