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    Jan 14, 2014

    COE supply hits record low

    CAR certificate of entitlement (COE) prices are likely to rise as the Land Transport Authority (LTA) continued to shrink supply to a new record low yesterday.

    There will be 1,800 car COEs available a month between next month and April - about 10 per cent down on the current low of 1,996.

    The decrease comes despite a new three-month allocation system which the LTA adopted to make COE supply "more responsive" to demand.

    If the previous six-monthly method was used, the new supply would have shrunk by around another 5 per cent. Including commercial-vehicle and motorbike COEs, the new total monthly supply adds up to 3,043 - 12 per cent down from 3,471 a month between August last year and this month.

    The LTA pointed out that the monthly supply would have been even smaller at 2,884 if it had stayed with the previous allocation method. This is because COE supply for any given period depends on the preceding period.

    From July to December last year, more vehicles were deregistered in the latter three months than the first three.

    Deregistration is expected to rise in the later part of this year as more cars registered 10 years ago reach the end of their lifespans. This, in turn, will bolster the COE supply and lower premiums.

    Singapore Vehicle Traders Association secretary Raymond Tang said of the new method: "It can be good, it can also be bad. A big player can control the COE supply by delaying or speeding up the number of cars scrapped (deregistered) because he doesn't have to wait that long now."

    National University of Singapore transport economist Anthony Chin said a shorter period could mean seasonal blips may be translated more sharply on the supply side.

    He said: "But it could work both ways. Bidders will know that they have to wait for only another three months for the situation to change."

    Meanwhile, motor traders said average car premiums are likely to stay high, at least up to April, with COEs for bigger and more powerful cars bearing the brunt of this increase.