Sep 10, 2013

    No quick relief for Cat A COEs

    CERTIFICATE of entitlement (COE) prices for cars in Category (Cat) A - those under 1,600cc - are expected to head north until February next year, in reaction to a new measure to provide more social equity in car ownership.

    Car dealers told My Paper this is expected of Cat A COEs as people rush to buy cars before the new measure takes effect.

    From the first COE bidding exercise in February next year, cars registered under Cat A must meet an additional criterion of having an engine power not exceeding 97 kilowatts, or about 130 brake horsepower, on top of cylinder capacity (cc).

    The move is aimed at arresting a trend in recent years in which luxury-car manufacturers introduced new models that encroached into Cat A, said Transport Minister Lui Tuck Yew, who announced the change yesterday.

    The trend has been cited as the driver of high COEprices for Cat A, which is typically regarded as the category for mass-market models.

    Many luxury cars tend to come under Cat B, for cars with a larger engine capacity of 1,600cc and above.

    For the recent COE bidding exercise which ended on Wednesday, Cat A COEs finished at $77,304, up 1.4 per cent from the previous bidding exercise, which ended on Aug 21.

    Based on car registrations last year, the Land Transport Authority said that, with an added engine-power criterion under the COE change, about 50 per cent of cars in Cat A would move to Cat B.

    Mr Ron Lim, general manager of the sales and marketing department at Tan Chong Motor Sales, expected the announcement to exert some pressure on Cat B prices too. "If (buyers) don't enter the market now, come next year, there will be more competition in Cat B," Mr Lim added.

    Mr Lee Nian Tjoe, a public-relations senior manager at Audi Singapore, said the COE change was intended to make mass-market cars in Cat A more affordable, but this was unlikely to be immediate.

    Transport expert Lee Der Horng from the National University of Singapore estimated that Cat A COE prices may hit between $80,000 and $90,000 before February, but he also expected them to drop below the current levels when the new policy kicks in.

    Dr Lee said the added criterion was a "positive move", but luxury-car dealers may react by importing an equivalent diesel model, or one with a smaller engine power.

    Economist Walter Theseira from the Nanyang Technological University said: "The fundamental thing is to address gaps in the public-transport system, which make people feel like they need to own a car. In terms of social equity, a lot of people feel that they are disadvantaged if they don't have one."