Singapore’s Car Market Faces Challenges Amid Rising COE Costs
In the latest tender on Wednesday, the prices for Certificates of Entitlement (COEs) in Singapore escalated significantly, spurred by the announcement of a reduced quota for the upcoming November to January period.
The COE premium for cars with engines up to 1,600cc and 130bhp surged by 12.1 per cent over two weeks, reaching $52,709, marking the highest since August 2016. For vehicles exceeding 1,600cc or 130bhp, the increase was 14.3 per cent, pushing the cost to $80,210, the peak since April 2014. The Open category, often a proxy for larger cars, saw a dramatic rise of 16.8 per cent, or $12,244, concluding at $85,000, the highest since November 2013.
Aggressive bidding from Tesla has been noted as a key driver behind these soaring premiums, as the American brand has surpassed MG to become the top-selling electric vehicle manufacturer in Singapore, registering over 500 units last month. Tesla’s strategy of not including COE in the vehicle price but seeking customer approval to bid for COE at an additional 15 per cent has been effective, ensuring premium increases without risk to the company.
Commercial vehicle COE prices also increased by 4.1 per cent to $40,501, while motorcycle premiums experienced a modest 2.9 per cent rise, finishing at $9,310. The forthcoming reduction in car COE quotas is expected to be between 24 per cent and 34 per cent.
Mr Nicholas Wong, General Manager at Honda distributor Kah Motor, commented on the unexpected scale of the price surge, highlighting the now-near $30,000 difference between Category A and Category B vehicles. He attributes part of this surge to the increasing demand for electric and hybrid vehicles, which predominantly fall into Category B.
Mr Neo Nam Heng of Prime Motors pointed out that with the current low COE supply, even slight demand increases can significantly affect prices. Similarly, Mr Ricky Tay from Volkswagen Group Singapore noted that the high number of unsuccessful bids in the recent exercise indicates a tight market for the next few months.
