Singapore — The Certificate of Entitlement (COE) recategorisation for cars has achieved its goal of retaining models for the mass market, said the Land Transport Authority (LTA) yesterday, as it published statistics to show that the policy tweak that kicked in last month had led to “a significant decrease” in the median Open Market Value (OMV) for Category A cars.
Motor traders, however, were less than convinced as they pointed to recent COE premiums, which have continued to remain high.
Before the move, COE premiums for Category A were more than S$72,000.
In the latest bidding exercise, which ended yesterday, COE premiums in the category closed 0.26 per cent lower than two weeks ago to S$76,999 — the only category to witness a fall.
Asked why COE premiums are still on an upward trend, an LTA spokesperson said the recategorisation was not aimed at lowering COE prices, but to better allow Category A to cater to the mass market. “COE prices are determined by the interplay of supply and demand,” she added.
According to LTA’s statistics, more than 80 per cent of cars registered last month under Category A — for cars with an engine capacity of up to 1,600cc and 130bhp — had an OMV of less than or equal to S$20,000.
In contrast, less than half of the cars registered under the category in the six months before the reclassification kicked in had an OMV of less than or equal to S$20,000.
The OMV is the approximate cost of a car.
The median OMV of cars registered with Category A COEs last month fell 28 per cent to S$18,845, compared with a median value of S$26,147 between last August and January. This decrease is fairly significant, the LTA said.
“The recategorisation has thus achieved its purpose of retaining Cat A primarily for lower-value models, which better caters to the mass market,” the authority added.
Mr Ron Lim, General Manager of Nissan agent Tan Chong Motor, said it would not be fair to make an assessment on the success of the re-catergorisation exercise based on one month’s data.
“Sad to say, most of the mass market buyers were forced to get COEs at S$70,000 as the expected correction did not come about,” he said. “Buyers are still bleeding and it is not fair to go on just one month’s data.”
Singapore Vehicle Traders Association Honorary Secretary Raymond Tang said luxury makes are still present in Category A, as a number of European brands have brought in a slew of diesel and low-powered models that falls below the 130bhp limit for the category.
“If the small-car category just consisted of just mass-market Japanese cars, the COE premiums would not be exceeding S$65,000,” he added.
The LTA said it would continue to monitor the market.
“We expect that the market will evolve over time, even within the so-called ‘mass market’ category, especially as incomes rise overall and motor technology improves. We will review our car ownership policies as necessary to keep up with such changes,” said the spokesperson.
The LTA also allayed fears that there would be an impact on Category B cars, those above 1,600cc and 130bhp.
The median OMV of cars registered in that category has remained relatively stable, with a slight decrease of about 11 per cent from S$42,856 in the six months prior to recategorisation to S$38,107 last month, the authority said.