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COE plunge means now is ideal time to buy Cat A car

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  • Queen of sgForums
    驚世駭俗醜不啦嘰 moderatress
    FireIce's Avatar
    266,164 posts since Dec '99
    • This week saw the premium for Category A COEs fall to its lowest level in seven years.

      So if you are looking to buy a car fitted with an engine with a capacity or 1,600cc or less that makes no more than 130hp, it is currently the best time to do so since November 2010.

      Industry watchers generally cite two main reasons for the sharp drop when it is compared to the other COE categories.

      The first reason for the drop in Cat A was that this was the first round of bidding after the Sept 1 deadline when the new Euro VI emissions compliancy became mandatory for every car sold.

      This means that there is no longer any pressure on dealers to clear any remaining stocks of pre-Euro VI cars in the Cat A segment.

      The second is that the big private hire companies, such as Grab and Uber, are understood to have reached saturation point and are no longer buying cars in numbers that would have an effect on COE premiums.

      There have also been reports of leasing companies putting their private hire cars on the used market.

      With good deals to be had for these relatively new cars, a significant portion of buyers who would otherwise be looking to buy a car in the Cat A segment have shifted their attention towards the used private hire cars.

      Then there is the “Hungry Ghost effect”.

      During this time of the year, some people are averse to getting married, moving house or starting a new business and often hold off on buying a new car as well.

      Certainly, dealers will tell you that around Chinese New Year, for example, they experience a higher number of customers than during the Seventh Month.

      For the next round and the rest of the year though, it is hard to see why the COE prices would go any lower than the S$36,001 for Cat A.

      For starters, this low round of bidding will re-ignite some interest as dealers are bound to slash their prices for the small cars and those on the periphery of first-time buying or trading-in their existing cars will be enticed to jump in.

      This, in turn, could cause a knee-jerk reaction and see prices go back up again. So if you are expecting prices to drop further, that ship has probably sailed for this year.

      In the longer term, the looming Jan 1, 2018, deadline — when cars will be banded by a new Vehicles Emission Scheme (VES) — will put pressure on dealers to sell models that currently benefit from the current CEVS rebate but will lose those cash benefits after New Year’s Day.

      The Honda Civic saloon, for example, currently benefits from a S$5,000 CEVS rebate but will lose it under the stricter VES rules next year. Similarly, the Toyota Harrier is also set to incur a S$10,000 surcharge under the new scheme in January.

      After Jan 1 however, the Singapore Motorshow — which is slated to take place that month — is expected to garner a significant amount of sales that should keep COE prices buoyant for the next few rounds.

      Beyond that — barring any game-changing announcements in Budget 2018 — one will probably have to wait till after March to see some softening in prices if the current economic situation does not improve by then. 

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