Tuesday, July 28, 2009

COE Supply Squeeze

A forecast on mid-year review of the COE supply was reported on the Straits Times today and it is bad news for dealers and motorists. The supply of COEs is expected to be squeezed by 10-15% with fewer vehicles being de-registered ahead of their COE expiry. Many motorists and businesses are stretching the usage of their current vehicles in this recession. The current cycle has already seen a reduction over the previous cycle but the dismay forecast will surely prop up the successful bid in the upcoming exercises. COE quota premium is expected to breach the S$20K mark very soon.

LTA had reached out to the motoring industry and will tweak the COE system to better meet the needs of the various stakeholders. I think that is a very challenge task since the objectives of the various stakeholders (buyers, trade associations for motorcars, motorcycles, goods vehicles, industrial vehicles, etc.) vary widely.

The rising cost of the COEs will be passed back to buyers and first-time buyers will feel the pinch as the lower cost makes may see the COE component of the car cost exceeds the car itself. The used car market will see some growth and I encourage motorists selling their cars to scout for better offers from dealers or direct buyers since the value of the used cars is also supported by the high COE quota premium.

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