Car prices set to soar

Car prices set to soar
By Wayne Chan | Posted: 26 June 2011 2159 hrs
     
SINGAPORE: The continued rise in the premiums for the certificates of entitlement (COE) over the past year has affected the car market, and with the expected tightening of COE quotas in the next quarter, dealers say prices may even go up further.

Car dealers Channel NewsAsia spoke with said several factors are behind the continued rise of COE prices.

Chief among them is a change in the COE quota system last year, where a new formula allows authorities to better manage the growth of the vehicle population, by removing yearly fluctuations in supply.

Under the new methodology, the Land Transport Authority (LTA) recycles the COE quota from the actual vehicle de-registrations in the most recent six-month period back into the system.

LTA said the scheme eliminates the need to make any corrections due to any under- or over-estimation.

Meanwhile, the entry of taxi companies and continental cars to the small car category is likely to drive COE prices higher.

Komoco Motors sales consultant Alvin Lim said: "Quite a lot of the taxi operators... have to come in and get the COE as well in order to put the taxi on the road.

"So for this reason, they actually have to... as high as possible in order to secure the COE."

Dealers said the higher prices are definitely driving customers away, with some turning to second-hand cars.

Singapore Vehicle Traders Association honorary secretary Raymond Tang said: "Singaporeans are considering going to the used car market... because the price (difference is quite big)".

If the rise in COE premiums continues, dealers said smaller distributors who cannot afford to bid high will be driven out of the market.

-CNA/wk

- wong chee tat :)