SINGAPORE – The certificate of entitlement (COE) premium for the Open category breached the $150,000 mark at the latest tender exercise on Wednesday to close at a new all-time high of $152,000.
Industry observers said dealers may be trying to accumulate more Open category COEs to register cars in the remaining two months of the year before rebates are cut from 2024, as such certificates are valid for three months and transferrable.
In addition, dealers are racing to meet their year-end sales targets.
The premium for the Open Category – which can be used for any vehicle type except motorcycles, but ends up being used mostly for bigger cars – surged by 5.09 per cent over the $144,640 record set at the previous tender.
This is the fifth consecutive time this COE category has broken its record.
The COE premium for larger cars with engines above 1,600cc and 130bhp, or more powerful electric vehicles (EVs) above 110 kilowatts, climbed to $146,002, 3.63 per cent above the previous high of $140,889 set two weeks ago.
Smaller car COE ended at $104,000, which was 0.95 per cent lower than the $105,000 record posted at the previous tender.
The commercial vehicle COE premium also edged upwards by 2.5 per cent to finish at $85,900, from $83,801 before.
The COE premium for motorcycles closed at $10,856, 1.46 per cent above the $10,700 before.
The latest result seems to have startled even the motor dealers. When the tender closed at 4pm on Wednesday, the general manager at a dealership wondered out loud: “How is this possible?”
There were 1,039 bids in the COE category for smaller cars and less powerful EVs, compared to an average of less than 900 bids seen in the past four exercises.
Of that number, nearly 200 bids were entered in the final five minutes before the tender closed.
This is the first time since October 2021 that the number of bids broke into four-digits for any type of COE.
It follows an announcement by the Land Transport Authority (LTA) on Sept 29 that an additional 300 COEs for such cars will be reallocated equally between the two tender exercises in October.
The LTA said it was reallocating the COEs to help “meet anticipated demand from car buyers following the September announcement of changes to the Vehicular Emissions Scheme (VES)”.
With the revision, most hybrids and some of the more powerful EVs will receive $10,000 less in incentives from 2024.
Besides the reduced incentives, VES will also be made stricter with tightened pollutant thresholds.
At the same time, a new testing protocol to qualify cars for sale will kick in from Jan 1, 2024, and it is expected to give a less favourable rating than existing test standards.
Some cars that are currently in the neutral band and receive no incentives will be subjected to a penalty of $15,000 under the new regime.
Motor dealers said this is a significant enough reason to rush to sell affected cars within 2023.
If there was any surge in demand for hybrid cars to get the higher VES rebates before the new year, there was little sign of it at many showrooms, which have been quiet since the last tender exercise.
Mr Nicholas Wong, general manager of Honda agent Kah Motor, attributed the high number of bids recorded to fleet vehicle owners, adding that it would be “quite impossible” for dealers to collect so many orders since the last tender.
Wednesday’s tender is the second last exercise under the current three-month period. The LTA is expected to announce the COE supply for November to January in the coming weeks.
Motor dealers said that even if there would be more COEs available in the coming tenders, the combined pressure of revised VES incentives and the need to meet annual sales targets means it is unlikely that premiums will come down this year.
Ms Corinne Chua, Wearnes Automotive’s managing director for Volvo Cars, said that if motor dealers are anticipating a rush to get the higher incentives before the new year, the COE premium may hit “$160,000 or more.”
