THE price of Certificates of Entitlement (COEs) used to register mainstream cars had the largest increase among all categories in the first round of COE bidding in March. Prices for all other categories also rose, except those used for larger, more powerful cars.

The price for Category A, for mainstream cars, rose 8.1 per cent or S$6,199 to S$83,000. This is the category’s highest price so far this year, eclipsing the previous peak of S$81,589 in January’s first round of bidding. The Category A COE applies to cars with engines up to 1,600 cubic centimetres (cc) in capacity or with up to 97 kilowatts (kW) of power, or electric vehicles (EVs) with up to 110 kW of power.

Category B, used for larger or more powerful cars, was the only category to drop in price.

It fell 1 per cent or S$990 to S$96,010. This latest drop continues Category B’s price moderation, as its premium has fallen in every round this year to date.

It is used to register cars with engines more than 1,600 cc in capacity or that have more than 97 kW, or EVs with more than 110 kW.

Category E, the open category which can be used to register any type of motor vehicle except for motorcycles, increased 1.1 per cent or S$1,004 to S$95,010.

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Prices for Category C, applicable to commercial vehicles and buses, rose 3.6 per cent or S$2,598 to S$75,599. The premium for Category C has been on an uptrend in 2024, increasing in every round from S$67,599 in January’s first round of bidding.

Category D, used for motorcycles, increased 5.5 per cent, or S$489, to S$9,400.

Retail and private hire pressure

Industry observers suggested that the rise in Category A premiums could be the result of two factors – car dealerships clearing backlogs, and private-hire car fleets adding to their numbers.

Nicholas Wong, chief executive officer for Honda distributor Kah Motor, said that some car dealers could still be completing orders taken during the Singapore Motorshow 2024.

Observers cited the Jan 11 to 14 event – when dealers raked in orders – as a key factor for the dramatic increase in COE premiums in the following round.

Wong said that the typical car and COE package sold to consumers allows for six rounds of COE bidding for dealers to secure a COE and register the car.

With March’s first round of bidding now counting as the fourth round since the Motorshow, some dealers are running out of time to secure a certificate and complete their orders.

“If the dealers don’t secure a COE in the next two rounds, the order might be cancelled by the customer,” he said. Some dealers may also be facing stock issues, and they would not proceed to bid without stock in hand, he said.

Ng Choon Wee, the commercial director for Hyundai distributor Komoco Motors, said that while retail orders play a part, private-hire car fleets were a bigger factor.

“Now that we are at the fourth round of bidding since the Motorshow, I feel that most of the backlog would have already been cleared. In this period, we have also observed that walk-in traffic has lessened, since COE prices have not fallen by much,” he said.

“Private-hire car fleets will continue to be bidding for COEs. We have not really seen them stop adding to their fleets. Whether COE prices will rise is a matter of how many retail orders there are from dealerships,” Ng added.

Two other dealers polled by The Business Times – both retailers for mainstream East Asian car brands – also concurred that private-hire fleets were a factor in the increase in Category A’s premium.

The population of private-hire cars increased 12.3 per cent to an all-time high of 82,118 in January 2024, from 73,318 in January 2023.

Ng said: “Now that Category A has reached S$83,000, I think car buyers will wait to commit, and it will be slow for the next two rounds at least.”

“Given that Singapore’s overall retail sales in January could have dropped without the boost from car sales, I think the government will need to monitor COE prices carefully. If they go up again, car sales will go down,” he said.

Graphics: Hannah Kwah and Quah Kai Yuan