Let’s talk about the COE price in the first bidding in Apr 2012. It just broke through the roof for Open & Category B classes.

In Dec 2010, I blogged about the then COE price being ridiculously high by rising more than 700% since the 2008/09 financial crisis. My prediction then was that the price of the COE will remain hovering about 50k ~ 70k for the entire year of 2011. It turns out quite accurate. For the entire year, the COE remains within the 20k range only to pick up steam after the Chinese New Year. It is partially due to the strong sentiment in the overall economy. Apparently year of the dragon always have strong bull stock market hence number of bidders for the COE raises significantly. We can also notice that the Cat A class remains flat @ around 55k. My guess is that the taxi operator has reached the quota for new taxis therefore bidding from these companies slows. Another reason is that this class of vehicle can only withstand a rise to this level hence the price balance out at this level. Imagine a higher end 1.6 litre Korean car with an OMV of 18K after factoring the shipping, duties and profit for the distributor, the true cost of the car might be 50K. Plus another 50k COE, this makes the car cost the end buyer 100k. The COE alone is the 100% of the true cost of the vehicle.

On a contrary view, Cat B’s 80k COE price is probably less than 40% of the true cost of a German make.
E.g. Typical mid level (below 2.5 litre) German car with an OMV of 60k plus all the cost of bringing the car to our showroom is around 130k ~ 150k. This car will sell for around 240k, therefore the percentage of the COE is only about 30 ~ 40% of the car making the impact of the COE not as significant as compared to the Cat A class vehicles.

My updated predictions.

I think that the prices for Cat A COE have probably reached an balance point and cannot hold out for any spike in prices. Words from the showrooms, confirm the slowing sales number. I am looking at prices to hover at current level dropping a little in the middle of the year before picking up towards the end.

Cat B and Open will likely see a continue strengthening of prices for the entire year. A quick check at the showrooms, shows that activities are still quite high and with newer models coming, I do not see the COE prices for these classes coming down drastically. COE prices crossing the six figures mark will not be a shocker for me.

Leonard Chiu
Auto Expert in Insurance, Claims & Market Analysis
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Disclaimer: The above predictions and views are purely the writer’s own point of view. Readers should take all precautious and prudent planning before committing to purchase a vehicle


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