Angbaos Spent on COE Premiums (COE: February 2019 Second Tender)
COE Prices Largely Higher in Second Tender Exercise of February
In the second tender exercise of February, Certificate of Entitlement (COE) prices were largely higher.
Premiums for cars below 1,600cc or 130bhp (Cat A) rose 2.4% to $26,301.
Premiums for cars above 1,600cc or 130bhp (Cat B) rose 2.6% to $34,509.
For the “Open” Category (Cat E), which is typically used for bigger cars, premiums rose 3.8% to $36,667.
The rise is unsurprising given premiums for cars (Cat A, B and E) have on average risen 3.9% during the first bidding period after Chinese New Year over the past 8 years.
Showrooms are typically closed during the festive period and buyers defer their purchases to after Chinese New Year.
Lower Supply Ahead
The Quota for COEs this exercise was 4,403, slightly lower than 4,427 last quarter but 13% lower than the Nov-Jan period.
This was expected as LTA announced that it was lowering its monthly COE quota for the Feb-Apr period by 13% to 8,752, versus the prior Nov-Jan period where quotas were 10,046 monthly.
For the next two months, similar supply levels can be expected.
Higher Demand from the Ride Hailing Industry
In anticipation of GoJek’s entry to Singapore in November 2018, the demand for cars has risen, significantly outpacing supply.
The shortage of COE premiums for cars (Cat A, B and E), calculated by deducting successful bids from received bids, has averaged 3,659 monthly since July 2018, rising 39% from the first half of 2018.
While Grab has before said it would not engage in a price war with GoJek , promotions seemed to have resumed in January and February.
This suggests competition remains intense and demand for vehicles will most likely be supported by the ride-hailing industry. While GoJek typically does not own cars, dealers which partner the Indonesian company have to purchase vehicles to satisfy its rental demand.
Expect Higher COEs
COEs for cars (Cat A, B and E) have already risen by 15% since its December low. Steer expects this to rise further and encourages potential car owners to make their purchase.
Cars are a large ticket item while maintenance can be expensive and confusing. Steer’s 5% cashback allows customers to save money while our simple-to-use platform allows car owners like you to find reliable car workshops that suit your needs.
