New car buying interest up after announcement of COE supply increase

COE supply for Nov-2020 to Jan-2021 period announced

The LTA has announced that the total COE supply for the Nov-2020 to Jan-2021 period will go up by 7%. Cat A COE supply will decrease by 2%, while Cat B will see a significant 16% increase. Combined with the 3% increase in Cat E COE supply, total passenger car COE quota will increase by 6%.

	Cat A	Cat B	Cat E	Total passenger car COEs
Avg Monthly Quota for Nov to Jan 2021 Bidding Exercise	1,925	2,014	926	4,865
Monthly Quota for Aug to Oct 2020 Bidding Exercise	1,967	1,729	903	4,599
% Change (Quarter on Quarter)	-2%	16%	3%	6%

With the COE supply for Cat A set to decrease, this will put upward pressure on Cat A COE premiums in the coming months. However, the 16% increase in Cat B supply will put downward pressure on Cat B premiums.

Ron Lim, Head of Sales & Marketing, Tan Chong Motor Sales, tells us, "For Cat B, although the COE supply will increase, the introduction of many new Cat B models will likely continue to support buying demand. On our end, we continue to see strong interest and demand for our Serena e-POWER. Given this, we do not see Cat B COE premiums shifting much from the current level even with more COEs available."

New car buying interest increases

In October, there has been an increase in showroom enquiries, based on sgCarMart's monitoring of sales enquiries to new car dealers. Compared to the previous month, sales enquiries in October increased by 21%. This increase in new car buying interest will place some upward pressure on COE premiums across the board.

"Purchasing cars is likely to become a priority for many Singaporeans after this pandemic. Many families in Singapore, especially those with vulnerable elderly and young children, are leaning towards owning their own vehicle now as hygiene and safety takes precedence during commutes," says Ricky Tay, Managing Director, Volkswagen Group Singapore.

"Demand for both Volkswagen and Skoda cars has seen a steady increase in the recent months and we expect this to continue especially with the sensible pricing across our model range," he adds.

Minimal movement in COE premiums

In the most recent 21 October COE bidding exercise, COE premiums increased for Cat A and Cat B, while premiums fell slightly for Cat E compared to the first bidding round in October.

Premiums for Cat A, for cars up to 1,600cc in engine capacity and with an output of no more than 130bhp, increased by $800 (2.2%) and ended at $37,334 this bidding round.

Premiums for Cat B, for larger cars with more than 130bhp or engine displacements larger than 1,600cc, likewise saw only a slight upward bump this bidding round, rising by $300 (0.7%) to reach $40,990.

In Cat E, the open category, premiums fell by $412 (1.0%), closing at $39,889.

New car price adjustments mixed amongst dealers

After the latest COE bidding, there was mixed price adjustments across a selected panel of new car dealerships monitored by sgCarMart. Considering COE premiums changed by less than 2%, these price adjustments are likely in response to the upcoming adjustment in COE supply rather than a response to COE premium changes.

More than 40% of dealers, including brands such as BMW, Lexus and Subaru, did not adjust their new car prices for both Cat A and Cat B models.

Some other dealers did make some price adjustments. Toyota and Volkswagen increased prices for Cat A cars by at least $1,000. For Cat B, prices at many dealers remained unchanged, while brands including Mazda, Nissan, Skoda and Toyota all reduced prices. The adjustment in Cat B prices are likely a bid to attract new customers ahead of the expected growth in Cat B COE supply for the upcoming quarter.

This article was updated on 29 Sep 2022.