Tepid economy puts brakes on COE premiums
CERTIFICATES of entitlement (COEs) were a mixed bag at the latest tender yesterday, as a number of factors influenced bidding.
COE price for cars up to 1,600cc and 130bhp fell by 3.4 per cent to close at a four-month low of $51,506.
Motor traders attributed this to weaker consumer sentiment on the back of a gloomier economic outlook.
COE cost for cars above 1,600cc or 130bhp crept up by 0.9 per cent to end at $57,002. Car dealers cited the launch of the new Mercedes-Benz E-class - a popular luxury car - as one reason.
"Buyers in the segment are also less price-sensitive," noted Nicholas Wong, general manager of Honda agent Kah Motor.
Commercial vehicle COE premium closed 3.7 per cent higher at $49,801 as the effects of a smaller supply wore on.
As fewer vehicles were scrapped, the August-October COE quota is 23 per cent smaller than the previous quota.
This, dealers said, offset the effects of weaker sales.
Likewise, motorcycle premiums inched up by 1.6 per cent to hit a five-month high of $6,452. The motorbike COE quota has shrunk by 9.6 per cent.
The premium for Open COE, which can be used for any vehicle type but ends up mostly for bigger cars, was 0.1 per cent lower at $56,889 - despite a 17 per cent shrinkage in supply.
COEs in this category are transferable, and are often clinched by speculators who resell them at a profit. The fact their premium has ended lower twice in a row - despite such a supply contraction - shows bidders are bearish.
Neo Nam Heng, chairman of diversified group Prime, said there is "a general weakness in the market" - despite a three-week gap between this tender and the previous one - which typically allows dealers to collect more orders than the usual two-week gap.
"The economy is not doing well," he said. "Now with Zika, tourist numbers will be down too."