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    Feb 06, 2014

    New rule fails to ease Cat A prices

    A CHINESE New Year sales blitz by Mercedes-Benz agent Cycle & Carriage has kept premiums buoyant in the latest certificate of entitlement (COE) tender.

    Over the holiday, the authorised dealer opened bookings for models that meet the new 130bhp power cap for cars in Category A.

    The agent was not expected to have such models ready until later this year.

    Prices started from $138,000 for a 122bhp Mercedes A180 - just $6,000 more than the price of a Toyota Corolla.

    Similar 122bhp versions of the B-class and CLA-class were also offered.

    "The response was fantastic," said an insider.

    As a result, Category A, for cars up to 1,600cc and 130bhp, eased by merely 1 per cent to close at $71,564 yesterday, despite expectations that it would dive on the back of a re-categorisation that kicked in this month.

    The move was meant to level the playing field in the mass-market category, which has been overrun by premium brands in the last few years.

    "Clearly, the reclassification has not worked," commented Volkswagen Singapore general manager of sales Daniel Chong.

    Like most other European makes, VW has brought in a wide range of new models that qualify for Cat A.

    Mr Chong said Cat B's 4.7 per cent fall to $75,300 was a surprise.

    The market had expected it to rise because up to 30 models previously in Cat A had migrated over. The quota for these costlier and more powerful cars had also shrank more than that for Cat A.

    Open COEs, which can be used for any vehicle type but end up mainly as a proxy for Cat B, finished 2.3 per cent lower at $77,003.

    Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said the curb on car loans has driven many buyers to downgrade to smaller cars, adding bidding pressure in Cat A.

    He noted that there is also "pent-up demand" from motorists who have been holding off replacing their ageing cars "for a long time".

    "Many of them have only a couple of months left before their COEs expire," he said.

    On top of that, motor traders pointed to the record low supply of car COEs as an underlying reason for premiums remaining relatively firm.

    "You have high pent-up demand, and low supply," said Mr Lim. "It looks like budget car buyers will remain disappointed."

    Meanwhile, commercial vehicle premiums ended 2 per cent higher at $51,002, while those for motorbikes revved 12.8 per cent higher to hit $3,051 - their highest level since 1997.