Wednesday, July 29, 2009

COE Prediction - August 2009 1st Bidding Exercise

The COE supply squeeze (see my last post) is expected reduce quota by 10-15%; it may be up to 20% in the worst case. Thus, COE quota premium is expected to breach the S$20K mark very soon, especially for Category B.

I believe that LTA will also announce some tweaks to the algorithm for deriving the number of COEs for future years since the economy slowdown has created the vicious cycle of low scrap rate with high COE quota premium, resulting in ever-lowering quota if the current system remains unchanged.

The oversubscribed rate for the July 2nd bidding exercise was about 14% for Category A COEs, 35% for Category B COEs and 90% for Category E (Open) COEs. Although the demand for smaller cars is tapering, my prediction is that the quota premiums for all categories will raise in tandem with the news article in the local papers.

Prediction on July 29:
Category A: $17,000-18,000
Category B: $20,000-21,000

Verdict on August 5:
Category A: $13,658
Category B: $18,890

No comments: