Cat A COEs may fall 10 to 15 per cent
The Business Times
THREE new Japanese sedans are expected to shake up the COE Category A market when they arrive early next year, just in time for a recategorisation of the small-car segment.
The launches of the new Toyota Corolla Altis, Mazda3 and Honda City are likely to keep the Cat A COE premium relatively buoyant despite the exit of luxury models, which had been blamed for pushing up prices.
Still, most dealers foresee at least a 10 to 15 per cent fall from current certificate-of-entitlement levels.
From February next year, the engines of Cat A cars not only have to be limited in displacement to 1,600cc or lower, but their power cannot exceed 97 kilowatt or 130 brake horsepower.
This means 42 models currently in Cat A are affected and will have to move over to Cat B (for cars above 1,600cc), including luxury rides like Singapore's top model last year, the Mercedes-Benz C180, and the BMW 316i. There will be about 100 models in the new Cat A.
With their bigger profit margins, distributors of high-end cars were said to have driven Cat A COE premiums to an all-time high of $92,100 in January this year. The premium has since slipped to $72,609 now.
"Next February should see the return of bread-and-butter models from those Japanese and Korean brands which have been priced out of Cat A for over two years," said a sales manager at a mass-market dealership. "There are many prospective upgraders who have been waiting on the sidelines because of high car prices."
He added that after the new rules kick in, he expects the Cat A COE premium to drop to the $60,000 level.
"Also, with the loan curbs still in force, affordability is an issue. So when Cat A softens, we will see more people coming back into the showrooms," he said.
But will the influx of these buyers keep the Cat A COE premium where it is today?
"No, premiums should soften despite...strong demand," said the sales manager. "This is because this group of buyers is not in the same league as those who buy Mercedes-Benzes or BMWs."
The Thai-made Altis has traditionally been Toyota's best-selling model here. The new model is expected to be launched in January.
The new Mazda3 is slated to arrive in the first quarter of next year from Japan. As for the new Honda City, it is scheduled for a Q2 introduction here.