Tuesday, February 10, 2009

COE Prediction - February 2009 2nd Bidding Exercise

The COE Quota Premium is likely to see a technical rebound. Although the economic outlook seems grim, potential buyers are likely to nibble at the attractive offers of FREE COE. If you really need to change your ride, it is a good opportunity now.

Let's talk about the "need" to change ride - motorists are still trading in cars aged five years or even less. Wise decision? No. Deep pockets? I hope so. Many of the cars are still in good condition and can be more fully utilized but the foolish owners succumb to the temptation of a new ride. Renewing COE for vehicles near age of 10 at the Prevailing Quota Premium (PQP) is very attractive for cash-strapped motorists whose vehicles are in good condition and road worthiness. It costs about $2,700 and $2,200, in addition to the scrap value and higher road tax, to extend the use of Category A and B vehicles for 5 more years. The PQP will come down even more after the upcoming bidding exercise.

One good option now is to buy (at near scrap value) a used 8-10 year old Continental make in tip top condition and pay the PQP for another 5 or 10 years COE renewal. Do drop me a note (on the comments) if you have executed on the idea.

Prediction on February 10:
Category A: $2,000-3,000
Category B: $1,000-2,000

LTA has announced the cut in COE quota for 2009/2010 on February 12. The reduction is about 24% from the previous year's quota but Category B is reduced by 30%. Quota premium is expected to rebound strongly with dealers pressuring buyers to commit.

Revised prediction on February 13:
Category A: $3,000-4,000
Category B: $4,000-5,000

Verdict on February 18:
Category A: $4,460
Category B: $4,889

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