Eyeing bargain Cat A COE? Don't bet on it
THE expected fall in the Category A COE premium after February may not be significant after all.
Two German luxury models joining the re-defined small-car category - the Mercedes-Benz CLA180 and Audi's A3 Sedan - could well spoil the mass-market party.
After the cost of a Cat A certificate of entitlement hit a record high of $92,100 in January this year, complaints about luxury models encroaching on the bread-and-butter segment and driving up prices there grew louder. The high-end models included the Mercedes-Benz C-Class, CLA-Class and A-Class, BMW 3 Series and 1 Series, the Audi A1 and A3 Sportback, and the Mini.
So in September, the Government announced that the Cat A COE category for cars under 1,600cc would be defined by a new criterion: the engine power of cars in this category is not to exceed 97kW or 130hp.
The intent behind refining the COE categorisation was to keep Cat A primarily for mass-market cars, said the Land Transport Authority.
The new categorisation will apply to cars registered using COEs obtained from the first bidding exercise in February. Out of the approximately 150 variants in Cat A, about 40 will be re-categorised under Cat B - the segment for cars above 1,600cc - going by the new engine-output cap.
Luxury models that have to migrate to Cat B include the Mercedes-Benz C180 - Singapore's top model last year - the CLA200 and A200 (all three have 156hp 1.6-litre engines); the BMW 316i and 116i with 136hp, and the 118i with 184hp; and the Mini Cooper S with 184hp.
The re-categorisation announcement resulted in prospective buyers of mass-market Japanese and Korean brands waiting on the sidelines in the hope that Cat A premiums could fall by at least 10 to 15 per cent, come February. But they could wait in vain.
Firstly, Mercedes-Benz's CLA180, with 122hp, will still be in Cat A. It has not been confirmed whether Daimler, the distributor of Mercedes-Benz, will import this lower-output version of the CLA200, but it is likely to, given that the CLA is a popular model and that parallel importers are already offering it. In the middle of this year, the market attributed the strength of the Cat A premium to the launch of the CLA200.
Secondly, Audi will also have a small, upmarket saloon in the A3 Sedan. The A3 was previously available only as a hatchback with three or five doors, an option not popular with Singapore buyers, who prefer the saloon body style.
But buyers may well be attracted to the stylish, compact A3 Sedan 1.4TFSI, with its 1.4-litre turbocharged engine producing just 122hp.
The CLA180 and A3 Sedan are likely to be priced at about $180,000 at today's COE levels.
Another factor that could affect COE premiums is the upcoming COE supply in the first half of next year.
So far, it isn't looking good. This is because the vehicle de-registration numbers for Cats A and B have been lower than expected, especially in August and September. The number of cars scrapped in the second half of this year will mostly determine the new COE quota from February to July next year.
In other words, those looking for a bargain after February could be disappointed.