ALREADY THINKING OF popping down to the hardware store for a hacksaw so you can remove an arm and leg for a new car?
Hold up a sec! We hear tell that the car market’s been quieter than the audience at a German comedy festival, prompting some industry sources to predict a big fall in COE prices tomorrow.
You know what COEs are: those limited edition certificates that let you own and operate a car for 10 years. The Land Transport Authority doesn’t set COE prices, but sets a limit on how many are available for auction. If no one is buying, then the prices come down.
And, apparently, no one’s been buying. Showrooms around the island have been quiet, and even traditionally busy people (VW salesmen, we’re looking at you) have had time to twiddle their thumbs.
Category A COEs have a floor of roughly $50,000 since taxi companies have that much to bid. As for Category B, could we see it back below $80,000?
As for why no one is buying in the first place, apparently, ministerial talk about a tweak to the COE supply formula is what’s got car buyers in wait-and-see mode.
Come August, there’s broad expectation that the COE supply would be further tightened, mostly because no one is scrapping cars at the moment – and no scrapped cars means no room made for new cars. Also, the growth rate of the vehicle population is due to be trimmed then.
But transport minister Lui Tuck Yew recently posted this on his Facebook page:
“I understand that many people are concerned over the expected fall in overall COE quotas when the VGR of 0.5% p.a. is implemented from August this year and how this will affect the current high COE prices. I share your concerns.
The latest vehicle de-registration data shows us that if we proceed as planned with 0.5% growth rate for second half of 2012, it would put a significant squeeze on the vehicle quotas that is more severe than we had expected.”
What does this mean? Not sure, really. But everyone wants to wait and see, and hence few people have been signing on the dotted line for a new car.
So whatever happens to the COE market in the second half of the year, let’s see if there’s at least temporary respite from all this high-priced pain tomorrow.