Monthly Archives: July 2011

Car COE prices hit 14-year high

CERTIFICATES of entitlement prices continued to trek northwards in the latest tender, the first after last Friday’s announcement of quota numbers for the August-January period.
COE for cars up to 1,600cc and taxis inched up by 0.02 per cent to end at $56,002. Those for cars above 1,600cc ended 5.8 per cent higher at $72,501.
Both premiums are now at their highest in 14 years.
Open category COE, which can be used for any vehicle type but ends up mainly for cars, chalked the biggest rise yesterday. It rose by 8.3 per cent to finish at a six-month high of $74,490.
Commercial vehicle COE was 5.9 per cent higher at $34,502, while the motorcycle premium slipped by 14.7 per cent to close at $2,012.
Motor traders said the latest results reflected changes to the COE supply. The two premiums which rose the most yesterday – those for cars above 1,600cc and commercial vehicles – will also have the biggest quota reductions in the next six months.
And even though cars up to 1,600cc will actually have more certificates available, dealers said contractions in the other categories will drive companies to focus more on sales of their smaller models now. This is especially so for premium brands such as Mercedes-Benz, Volvo and Audi, which now have models below 1,600cc. BMW is expected to join the fray soon.
Premier Taxis contributed to yesterday’s price rise. It secured 20 COEs at $56,002 apiece, among the costliest certificates paid for by a taxi company.
Industry players said COEs are unlikely to soften any time soon.
‘Premiums can only go up,’ said Mr Alvyn Ang, director of operations of multi-brand agent Cycle Carriage.
Mr Ron Lim, general manager at Nissan agent Tan Chong, said: ‘Indications are that they will continue to point upwards.’
He added that the trade’s biggest worry now is whether the Government will lower the 1.5 per cent annual allowable growth rate in Singapore’s vehicle population – a determinant of COE supply.
‘The 1.5 per cent now accounts for 30 to 40 per cent of COE supply in each category. If it is brought down to zero, all hell will break loose,’ he said.

CHRISTOPHER TAN (The Straits Times)

COE supply till January remains flat

THOSE shopping for a small car or a motorcycle in the next six months can breathe a bit easier – certificate of entitlement (COE) supplies for the two vehicle categories are bigger for the August-January period.

But those in the market for bigger cars or commercial vehicles should brace themselves for higher prices on the back of an even tighter COE supply.

Car buyers on the whole, however, will see a 2.5 per cent dip in the quota, from 2,526 certificates a month to 2,463.

The number includes Open COEs, used predominantly for bigger cars.

Overall, COE supply for the next six months – announced by the Land Transport Authority yesterday – remains flat at 22,324, from 22,368 for February-July, as the slide in supply for bigger cars and commercial vehicles is offset by bigger quotas elsewhere.

COEs – meant to limit car ownership and hence the number of vehicles on the road – are put up for bidding twice a month.

Because of a shrinking supply, prices have risen to near-record levels.

Premium for cars up to 1,600cc is $55,989 now and that for cars above 1,600cc is $68,501 – more than four times their respective levels just three years ago.

Motor traders are not surprised by the new COE quotas.

‘We have never been bullish about supply in the next half,’ said Mr Say Kwee Neng, managing director of BMW agent Performance Motors.

‘This means competition among the big boys will intensify on all fronts.’

Asked where COE premiums are likely to head in the second half, he said much depends on how the economy performs.

But he expects premiums for Category B (cars above 1,600cc) to breach $70,000 ‘if demand for cars holds’.
Mr Vincent Ng, product manager at Honda agent Kah Motor, said Category B premiums can head only ‘northwards’.

Noting that ‘$70,000 is a done deal’, he added: ‘The question is whether it will go higher.’

Others reckon the upward pressure on bigger- car premiums could spill over to those for Category A (up to 1,600cc).

Mr Philip Lu, general manager of Mazda Singapore, said: ‘What could possibly happen is that the premium brands will now try to sell more Category A cars to make up for the sizeable cut in the Category B quota.
‘I see higher premiums across all the car categories.’

The outlook ahead remains bleak.

Kah Motor’s Mr Ng said the COE quota is likely to shrink even further, citing a slowdown in the number of cars taken off the road – a major determinant of COE supply.

‘Next year’s supply also depends very much on how the Government adjusts the 1.5 per cent growth rate,’ he added, referring to the vehicle- population cap – the other determinant of COE supply – that is under review now.

The rate was halved from 3 per cent two years ago as the Government sought to put a brake on Singapore’s car population.

It had grown by more than 50 per cent to 595,185 from 2000 to 2010.

Traders are keeping their fingers crossed that the allowable growth rate will not be trimmed further.
They point out that in a tight supply situation, the growth rate component is a sizeable influence on the number of COEs available.

The LTA said a new growth rate will be announced ‘once the review has been completed’.

As it is, car sales look likely to dip below 30,000 units this year – a record low. It was 42,000 last year and close to 69,000 in 2009.

In the five years prior to that, the annual average exceeded 105,000.

LTA studying scheme to reward off-peak commuters

THE authorities are mulling over ways to persuade public transport commuters to travel during non-peak hours, so as to reduce bunching of services, crowding and congestion associated with morning and evening rush hours.
The Straits Times understands that the Land Transport Authority (LTA) is looking in particular at a proposal by academic Balaji Prabhakar, a professor of electrical engineering and computer science at Stanford University.
Prof Balaji worked on a scheme in Bangalore between October 2008 and April 2009, where 14,000 commuters – largely those working for IT firm Infosys Technologies – were given incentives to leave for work earlier in the morning.
Employees earned credits according to how much earlier they were, and the credits entitled them to lucky draws with prizes of between 500 and 12,000 rupees (S$330).
Each week, 96,000 rupees were set aside, an amount roughly equivalent to the fuel that buses waste in rush-hour traffic jams.
The plan doubled the number of offpeak commuters.
In an interview with The Economist recently, Prof Balaji said this type of scheme is based on a principle of behavioural economics that says that people are rarely motivated by small rewards – say, a 10-cent fare discount. But they will be moved if there is a fair chance of winning $100 a week.
A scheme put in place by train operator SMRT way back in 1997 seems to bear this theory out.
Commuters who exit at a station within the city area before 7.30am from Mondays to Saturdays were given a 10-cent discount. SMRT said it did this to encourage off-peak travel.
It followed this up with a breakfast coupon that entitled early travellers to discounts of 10 to 50 per cent at selected outlets. But it discontinued the scheme after only two months.
SMRT admitted yesterday the impact of the initiative was ‘slight’, but added that it will continue to explore differential pricing to encourage change in commuters’ travel patterns.
Transport Minister Lui Tuck Yew said recently on his Facebook page that such a plan was ‘not a bad idea’.
‘We can certainly ask SMRT to ponder over it,’ he added.
Dr Lim Wee Kiak, former chairman of the Government Parliamentary Committee on Transport, was one proponent of ways to flatten peak-hour travel volumes.
His successor, Mr Cedric Foo, said yesterday that he was ‘encouraged’ that the LTA was studying such a scheme.
‘But it is not just a transport issue,’ he said.
‘Employers, schools will have to stagger starting times.
‘Or even stagger school holidays – but there will be trade-offs, because it will be hard for families to travel together.’
SBS Transit, which told The Straits Times it was in talks with the LTA on ways to ‘even out commuter demand’, noted that ‘peak-hour demand is a function of many factors, including office and school hours’.
‘As a public transport operator, we are all for any campaign which can help relieve peak traffic flow,’ SBS Transit spokesman Tammy Tan added.
Transport researcher Lee Der Horng of the National University of Singapore described the scheme as ‘interesting’.
When contacted, the LTA said it was still studying Prof Balaji’s proposal, and nothing had been decided yet.
The concept of spreading out peak demand is not entirely alien to the LTA, though. Singapore’s road-pricing scheme aims to achieve that.
Prof Balaji declined to say more about his scheme except that ‘the proposal is still being fleshed out and the details aren’t yet finalised’.

COE prices keep going up

THE premium for the Category A certificate of entitlement (COE) is now just $611 shy of the all-time high of $56,600 reached in October 1994.
At the close of tender yesterday, the prices of Category A COEs (for cars up to 1,600cc and taxis) had accelerated by 11.5 per cent to $55,989.
Prices in three other categories are at their second-highest levels for this year.
Open Category COEs posted a 5.1 per cent increase to reach $68,811. They can be used for any vehicle type but are mainly used for bigger cars.
The premium for Category B COEs (for cars above 1,600cc) climbed by 1.2 per cent to $68,501, while that for commercial vehicles rose by 4.6 per cent to $32,590.
Motorcycle COE prices revved up by 3 per cent to $2,360.
COEs, which give one the right to buy a car, are central to Singapore’s vehicle quota system, which enables the Government to control the growth of the vehicle population and road congestion.
Motor industry players said the increase in Category A premiums was due to strong buying sentiment and the launch of new cars such as the Volkswagen Jetta sedan last week.
Mr Leon Gumpert, general manager of sales at Volkswagen Singapore, did not want to disclose sales figures but said the company is pleased with buyers’ response to the Jetta’s launch.
He also attributed the premium hikes to more people buying cars because of an increase in the number of cars scrapped in May.
According to Land Transport Authority data, about 2,000 cars – mostly models up to 1,600cc – were scrapped in May, nearly 40 per cent more than the January to April monthly average.
Demand for Category A COEs was also propped up by aggressive bids from Premier Taxis.