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.