COE Rising? Learn How That Affects Current Car Owners and New Buyers

Certificate of entitlement (COE) premiums have continued their upward trend for the 5th consecutive time (as of 17th April 2019). Can we expect COE Premiums to continue the climb up? How will this affect you as a car owner? Is this the right time to get a new car? Should I consider this when looking for ways to sell my car or scrap my car for higher? Let us explore these topics below.

2018 had been a great year for car buyers with regards to COE premiums. Car buyers enjoyed a year-long period of relatively low COE prices with Category A (aka CAT A) premiums floating at $23,000 to $33,000. What was most surprising was that Category B (aka CAT B) premiums (which are traditionally higher than CAT A) have seen lower prices than CAT A COE premiums, on an average.

Mostly, COE trends tend to happen over a prolonged period of time. While fluctuations in COE Premiums are a given factor, sharp changes are typically rare and happen only during a stage of "economic crisis" as well as exceptionally specific situations. So the important question is will COE premiums continue to climb up?

The short answer is "probably yes". Nobody can really predict the future. However, we can base our predictions on historical data and current market situations. Historically, the average COE premium lies around $49,644.00 and 2018 was only noted as an anomaly. The currently rising COE Premiums could be attributed to a few causes:

COE growth was cut to zero. New car dealerships (especially authorised distributors) and enjoyed a phenomenal 4th quarter in 2018 and 1st quarter in 2019 in terms of sales. These cars are starting to reach Singapore and getting registered. We have enjoyed COE premiums at its lowest in 8 years and COE Premium tends to normalize to its average prices (barring any economic or specific situations). While we expect COE Premiums to continue that upward trend, do note that it is absolutely normal for prices to drop in the next 1 to 2 bids as consumers contemplate their actions. It is extremely rare to see a straight line increase in prices.

While COE Premiums are climbing quickly, current COE Premiums are still at a discount from its average levels of $49,644.00.

Having said that, you should never let car prices be the only motivating factor to your purchase. However, if there are changes in your family and needs, the answer is a definite yes. Do take note of that; we do expect COE Premiums to continue their upward trend and if you are buying a new car, please ask for guaranteed COE to avoid disappointments or potential disputes with your dealer.

How does this affect me as a car owner?

If you intend to continue enjoying your current car? Nothing really. However, if you have plans to consign with Otua and sell your current car, then yes, higher levels of COE Premiums means that demand and prices for used vehicles will rise in tandem.

While the above is true, do take note that there really isn’t a best time to look for "highest price for my car". One of the most common question that our customers at OTUA Auto ask:

"If I wait, will I be able to sell higher?"

The answer is "99.99% of the time, no". While used car demand and prices will rise or fall according to COE Premiums, the effects are often delayed. Furthermore, one has to always remember that cars are a depreciating asset; a regular Japanese car depreciates at a rate of $800 to $1200 per month and these figures are compounded for Continental cars. There is almost no chance for a regular car owner to sell his car for more "months later".

Also, even if you were able to capitalize on any potential sharp increase in prices for your current car, your next purchase will almost definitely be just as expensive. Unfortunately, we are all at the mercy of the markets and more often than not, if you sell high, expect to buy high as well.

At OTUA Singapore, our Client Advisors are trained to sniff out potential market changes and update you accordingly so you can fairly sell used cars in Singapore. You can always drop by our lounge during our operating hours for a discussion on your car and how we can help you sell better.

Otua Auto is a Singapore based car dealership. Sell your used car or resale motorcycle at the highest possible price.