Saturday, October 23, 2010

COE Quota Premium is Flattening Out

Chart source:

Category B COE Quota Premium is now fluctuating between the narrow band of $40-45K for the last seven bidding exercise. With the limited number of COEs at each bidding exercise, there are many motorists waiting on the sidelines to decide if they want to upgrade their rides. The phenomenon of such flat-line is associated with the lack of news and events to influence the market to rise or fall.

Is this good or bad news to potential buyers? Well, it is neither as there is really no news. I took a closer look at the Category A and Category E - they are consistent with Category B and do not give any clue to where COE quota premium is heading.

However, Category C is trending downwards which indicates that businesses are not rushing to replace ageing fleet, so business sentiment is somewhat cautious. Category D for motorcycles is trending upwards which indicates that the cheaper mode of transport is the only option for motor(cycl)ists priced out of the four-wheel markets.

What is my gut feel? It is unlikely to see a crash back to 2009 level of sub-$10K but I think the market will stay flat and may soften into 2011 as the world economies sputter under uncertain condition. For Category A buyers, you can consider it when quota premium is between $20-30K. For Category B buyers, you should be able to afford to go in even at current level.

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