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COE premiums mostly higher as dealers make final push for sales

This article is more than 12 months old

Certificate of entitlement (COE) premiums ended mostly higher in the last tender of the year yesterday as car dealers made a final push to shore up sales in a year of a pandemic and pared down supply.

But on average, this year's main car premium (for cars up to 1,600cc) is only slightly higher than last year's, despite the supply of certificates being 25 per cent smaller.

Compared with the average in 1999, which had a similar quota size, this year's average premium is appreciably lower.

At the close of yesterday's tender, the COE for cars up to 1,600cc finished 0.4 per cent lower at $40,556.

The COE for cars above 1,600cc climbed 9.5 per cent to close at a two-year high of $49,300.

Open COE, which can be used for any vehicle type except motorcycles but which ends up mostly for bigger cars, rose similarly to $49,500 - 8.8 per cent higher than its previous close two weeks ago, and its highest in 19 months.

The commercial vehicle COE finished 7 per cent higher at $35,201 - its highest since March 2018. The motorcycle premium crept up by 0.2 per cent to end at a four-month high of $7,689.

COE supply is determined by the number of cars scrapped in a particular year. And the number of vehicles being scrapped each year is influenced by the number of new ones registered 10 years earlier, as COEs have a lifespan of 10 years.

Industry players expect next year's COE supply to be either unchanged or slightly larger despite the number of new cars registered 10 years earlier, in 2011, being 33 per cent lower than in 2010.

This is because the shortfall will be made up by some 22,000 cars which had their COEs re-validated for five years in 2016. Five-year renewals cannot be re-validated further, and these cars will have to be scrapped next year.

Monthly quotas however, may be smaller than this year's because of the April-June bidding suspension, which resulted in supply being distributed over nine months instead of 12.

Distribution is also unlikely to be even throughout the year.

Transport