The Certificate of Entitlement (COE) prices have long been a point of contention for vehicle buyers in Singapore.
With the Land Transport Authority (LTA) announcing a 3.6% increase in the COE quota for the period from November 2024 to January 2025, many are wondering whether this will finally lead to a reduction in COE prices.
Understanding the COE Quota Increase
On October 4, 2024, LTA revealed that the COE quota for the November to January period will be 15,834, an increase of 3.6% from the previous quarter’s quota of 15,283.
This increase is distributed across several categories, with Category A COEs, meant for smaller and less powerful cars and electric vehicles (EVs), seeing the largest jump of 5.6%.
The total supply for Category A COEs will rise from 5,864 to 6,190 during the period.
Category B COEs, which are typically used for larger and more powerful vehicles, will see a smaller 2% increase, bringing the total to 4,060 from the previous 3,980.
Commercial vehicles (Category C) will benefit the most with an 8.3% boost in their quota, while the Open Category (Category E), which can be used for any vehicle type, will increase by 3.6%.
The quota for motorcycles (Category D), however, remains unchanged at 3,105.
Factors Impacting COE Prices
While an increase in COE quota generally implies greater supply and the potential for price relief, industry experts remain skeptical.
This sentiment is supported by the fact that COE prices are largely driven by demand.
While the quota increase will inject more certificates into the market, it is unlikely to match the surge in demand as more buyers rush to secure a COE before any further price hikes.
Will Prices Fall?
Given the modest increase in COE supply, it is unlikely that prices will fall dramatically in the last quarter of 2024.
While the additional COEs may offer some temporary relief, the market dynamics are such that demand will likely outstrip this supply increase, keeping premiums high.
In fact, with the rise in demand typically seen around major sales events like The Car Expo, some experts even predict a short-term spike in COE prices.
Moreover, it is important to consider the broader economic environment. Singapore’s vehicle ownership system is tightly regulated, and COE prices have been on an upward trajectory for years, largely due to limited supply and high demand.
Although LTA’s recent quota increase may provide a small buffer, it does not seem sufficient to reverse the overall trend of rising COE premiums.
Motorists hoping for a significant dip in COE prices may have to temper their expectations. While any increase in supply is welcome, the real impact on prices may not be felt until larger, more substantial quota increases are implemented.
As it stands, the relatively small percentage increase in COEs is unlikely to make a significant dent in premiums.
Conclusion
The LTA’s announcement of a 3.6% increase in the COE quota for the November 2024 to January 2025 period brings some hope for buyers, but it may not be enough to significantly lower COE prices.
Despite the quota increase, experts caution that demand will likely continue to outweigh supply, especially with upcoming events like The Car Expo boosting sales.
For motorists in Singapore, it may be a waiting game as they monitor future quota announcements and COE trends. In the meantime, those in urgent need of a vehicle might be wise to secure their COE sooner rather than later, as prices may remain high or even increase further in the coming months.
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