Small car COE breaches $92,000 mark

SINGAPORE - The COE premiums for small cars (up to 1,600cc) breached the $90,000 mark, finishing the year's first bidding session at $92,100.

This is up 12.4 per cent from last month's bidding where prices ended at $81,889.

Prices for big cars in Cat B (above 1,600 cc) also reached a new high, ending at $96,210. The previous record-breaking price was $94,502 in August 2012.

Premiums for motorcycles and the open category (used for any vehicle type but used mainly for luxury cars) also saw increases from the previous session that ended on December 19.

COEs for motorcycles will now cost $1,933, up from $1,701 while prices in the Open Category rose to $96,101, up from $95,990.

There was some relief in the commercial vehicle category with prices dropping to $60,000, down 3.5 per cent from last bidding's $62,201.

Jan 2013 - First bidding
Category	Jan 09 prices	Dec 19 prices
Cars (1,600CC below)	$92,100	$81,889
Cars (above 1,600CC)	$96,210	$93,501
Commercial vehicles	$60,000	$62,201
Motorcycles	$1,933	$1,701
Open category	$96,101	$95,990

Two new highs in latest COE results

COE for cars in Category A, up to 1,600cc, ended at $77,291, slightly above the previous record of $77,201, from two weeks ago.

Prices for Commercial vehicles in Category C also reached new high of $60,235, up from $59,111 in the last bidding exercises.

Premiums for cars in Category B, above 1,600cc, closed at $93,004, up from $92,400 two weeks ago while the Open Category which can be used to register any vehicle but is usually used for big cars, ended at $93,990.

This is up from $92,100.

Motorcycles were the only vehicles that saw a decrease, finished $1,689, down from $1,959 previously.

Nov 2012 - First bidding
Category	Nov 21 prices	Nov 7 prices
Cars (1,600CC below)	$77,291	$77,201
Cars (above 1,600CC)	$93,004	$92,400
Commercial vehicles	$60,235	$59,111
Motorcycles	$1,689	$1,959
Open category	$93,990	$92,100

S'pore govt launches 'myth busting' websites

The Singapore government has launched a new section on its official website that is designed to give answers to hot topics as part of its 'myth busting' initiatives, reported The Straits Times.

Called 'Factually', its purpose is to address questions that have arisen over controversial decisions. Since May, it has collected a series of primers on hot topics.

For instance, the very first question it addressed was whether a family with a $1,000 monthly income would be able to afford an HDB flat.

Topics range from transport, housing, COE, debt levels, procurement, and even the national reserve.

According to the paper, a spokesman for the Ministry of Information, Communications and the Arts (Mica) said that the section is meant to be 'a convenient, central and credible platform' for a summary of key facts on certain policy decision.

Apart from this, the Housing Board has also launched a new website called HDB Speaks (http://www.hdbspeaks.sg/), which, as its tagline states, lets you 'Get the facts on the myths of HDB'.

Its sections deal with topics such as HDB for singles, $1 million flats, COVs, and subletting.

DPM Tharman: Average S'porean won't feel the sharp effects of inflation

The average Singapore will not feel the effects of a sharp inflation, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said today in a speech at this year's May Day dinner.

He acknowledged that the 5.2 per cent increase in the Consumer Price Index (CPI) for March 2012 compared to a year ago, was a "high figure".

But more than half of this inflation rate of 5.2 per cent comes from higher COE premiums on cars and the effect of higher market rents on homes, the Manpower Minister said.

So those who already own their homes and are not buying a new car will be unaffected.

In fact for most Singaporeans, inflation in actual household expenses is lower than 5 per cent.

Mr Tharman explained that the increase in prices of daily necessities and essential services, such as food, clothing and footwear, and education, has actually been much more moderate, at 3.0 per cent or lower.

Nevertheless the Government is closely monitoring the situation, including prices of everyday goods and services, Mr Tharman said.

Inflation remains an important challenge and it is also one that union leaders are most concerned about, he said.

The Monetary Authority of Singapore has been gradually strengthening the value of the Singapore dollar to reduce the impact of imported inflation.

Actions have also been taken to cool the property market as an overheated property market with inflated property prices, while by themselves not part of the CPI, can drive up other prices.

Singapore to become a premium car market?

High-end names such as Audi, BMW and Mercedes-Benz are expected to make up for more than half of new cars sales next year, according to a Straits Times report today.

This is due to the lower number of certificates of entitlement available next year, which predetermines the number of cars sold.

The paper reported that the motor industry is "expecting next year's supply to shrink to between 26,000 and 28,000, from around 30,000 this year, 42,000 last year and an average of 100,000 a year between 2004 and 2008."

With a smaller supply in future COE numbers, are car prices expected to increase again?

Already, a restricted supply this year have caused COE prices to rise to more than $50,000 for cars up to 1,600cc and more than $70,000 for bigger cars, according to the report's figures.

And higher COE prices will naturally favour sales of premium cars rather than bread-and-butter brands like Toyotas and Hyundais, the paper said.

Mr David Ting, deputy editor of motoring magazine Torque, told the paper that buyers and sellers of such premium cars "are better able to stomach expensive COEs than those of mass market brands".

In short, this group is less affected by prices. The COE price forms a smaller percentage of the price of a premium make as compared to a mass-market make.

At today's prices, an average 1,600cc Japanese car is more than $100,000.

Coupled with the premium makes expanding their model range (some even into the Cat A category), lowering prices and investing more in marketing and advertising, the German makes have overtook the Japanese names, Mr Ting explained.

He was quoted by the paper as saying: "I think this might be the 'new normal' going forward."

High-end cars winning market race as COE supply shrinks

Premium brands are expected to account for more than half of new car sales next year as the certificate of entitlement (COE) supply shrinks to an all-time low and prices remain high.

Already, these brands, ranging from BMW, Mercedes-Benz and Audi to Porsche, Ferrari, Lamborghini and Rolls-Royce, are poised to garner about 46 per cent of sales this year.

This is up from 33 per cent last year and below 10 per cent in the past several decades.

Audi Singapore managing director Reinhold Carl predicted: 'The premium brands will account for more than half of new car sales next year.'

Some Singaporeans turn to vans as car prices soar

When businessman Solomon Tang, 37, was shopping for a compact runabout for his mother-in-law recently, he bought a Renault Kangoo van.

It may not be the last word in sleekness, but at around $70,000 brand new, the 1.5-litre diesel van was far cheaper than some of the cheapest passenger cars. An entry-level Toyota sedan, the Vios 1.5, for instance, costs $100,000.

Mr Tang said of the van: 'It's more practical than a car. And it runs on diesel, so you save quite a lot.'

With cars at near record prices - thanks to a limited supply of certificates of entitlement - buyers have begun looking at cheaper options.

THE PRICE ATTRACTION

• A brand new Renault Kangoo costs around $70,000. An entry-level sedan like the Toyota Vios 1.5, in comparison, costs $100,000

• A 2.5-litre turbo-diesel Navara double-cab pick-up, which seats five adults comfortably, costs slightly over $100,000

• A 2006 Avery, a 660cc petrol van, sells for $25,000 to $28,000

THE MINUSES

• Commercial vehicles have low scrap value

• They have a 70kmh speed limit

• They have higher insurance premiums - $1,500 for a mature driver with a 50 per cent no-claims bonus, compared to $1,000 for a mid-size car

• Installing a sofa seat in the rear is illegal

COE premiums up to $78k for cars

Certificate of entitlement (COE) prices for cars above 1,600 cc and the open category, usually used for cars, hit a 17-year high after the close of November's first bidding exercise.

Except in two categories, most premiums were on the up.

Prices for cars above 1,600c went up to $77,000, a 1.5 per cent movement. The open category, usually used for cars, saw the biggest hike for passenger cars. It rose 6 per cent to $78,001.

The last time these two categories saw higher price levels than these was back in September 1994.


COE prices for Category A (cars 1,600cc and below, including taxis) had scant relief as it dipped from $56,112 in October's second bidding to $55,997, a 0.2 per cent change.

Among all, commercial vehicle COE premiums had the biggest increase. It went up 10.2 per cent to $40,803.

Motorcycle premiums ended lower at $2,012.

According to The Straits Times, the rush to meet annual sales targets and the anticipation of fewer COEs next year had sent COE prices higher.

The Government has announced it will curb vehicle population with a revised vehicle growth rate that is lower than the current 1.5 per cent.

The growth rate will fall to 0.5 per cent from August 2012 to January 2013 and is expected to result in a smaller supply of COEs.

S'pore to reduce growth of vehicle population over next 3 years

Singapore's yearly vehicle population growth rate will be lowered incrementally over the next three years, starting with the current 1.5 per cent reduced to 1 per cent in 2012.

This will be further reduced to 0.5 per cent in 2013 and 2014, the Land Transport Authority (LTA) said on Friday.

For 2012, the 1 per cent growth will be front-loaded, meaning a 1.5 per cent annual growth rate will be kept from Feb 2012 to July 2012, followed by 0.5 per cent from Aug 2012 to Jan 2013, the second half of the quota year.


LTA said the current increase of 1.5 per cent in the vehicle numbers has outstripped the average annual road growth of about 1 per cent in recent years.
The transport body expects road growth to further slow down to about 0.5 per cent a year on average over the next decade.

"The lower vehicle growth rate is not expected to have a large impact on the COE supply in the next few years, especially in the context of an expected uptrend in vehicle de-registration numbers," it said.
The annual vehicle population growth rate will be reviewed after three years.

Govt set to curb vehicle population

Singapore's vehicle growth rate is set to be revised downwards this month to further limit vehicle growth.

Transport Minister Lui Tuck Yew told this to reporters on Tuesday but did not reveal the exact figure.

The current growth rate stands at 1.5 per cent.

The cut is likely to send the prices for certificates of entitlements even higher than current levels. Car prices are expected to increase as a result.


Explaining the move, Mr Lui said Singapore has limited space for new roads.

He said the current vehicle growth rate had to be revised to a more sustainable level.

The growth rate determines the number of new cars on the road is one of the instruments that the Government manages vehicle population.

The policy takes into account the number of vehicles scrapped and…

The quota was last reduced in 2009 -- it was halved from three per cent to the current 1.5 per cent.

Cost of living in Singapore increases

Inflation rose 5.7 per cent in August. This figure was more than expected as compared with a year ago.

According to the Department of Statistics, this was faster than the 5.15 per cent forecasted by economists.

Factors responsible for the year-on-year increase include higher cost of accommodation, private road transport and food.

Private road transport costs increased because of the rise in COE premiums.

Compared with August 2010, the cost of housing increased by 9.9 per cent due to higher accommodation cost and electricity tariffs.

Food prices also saw a 3.0 per cent increase due to the higher cost of fresh fish, diary products, eggs, meat and poultry.

In relation to the article I wrote previously about the Bank Deposits Interest Rates, how are we combating inflation effectively if we only put our savings into the banks?

Comparing to Bank Deposits Interest Rates at 0.050% per annum, we are actually losing a lot to inflation at 5.7%.

Opinion: Car prices to head south soon

At the time of writing, the COE for cars up to 1600cc was at $48,801, and the COE for cars above 1600cc was $70,890. The Open COE, a proxy for the latter, was $70,117.

Around the same time last year, they were between $30,000 and $43,000. And as recently as three years ago, the same premiums were mostly around $15,000 or less. With the COE supply staying tight for the rest of the year, the chances of a crash are as far-fetched as you finding a bikini babe on Pluto.

The world economy and stock markets are faltering, you say? Well, history has shown that the Singapore car market can be pretty resistant to socio-economic influences.

The single biggest determinant of prices has always been the number of entitlement certificates in the system. And the current supply is merely a quarter of what they were in the bountiful years of the mid-2000s.

Yes, if consumer sentiment is dampened by the sorry state of the world's former economic powerhouses (which, if you ask me, have not really recovered from the 2008-2009 financial meltdown), people's appetite for shiny new cars will weaken. But this won't make COE premiums nose-dive. At most, you might witness prices stabilise after a soft landing.

If a recession hits and persists, and employers wield the axe on salaries and headcounts, then all bets are off. But even then, we might not see premiums see-sawing like they did during the Asian financial crisis of 1997-98, because of the limited quantities of COEs currently. And unlike that period, "taxi participation" is a major factor today.

This is because there are many more cab companies as well as a larger population of taxis - both fuelling a demand for COEs. On top of that, the human population in Singapore has also increased significantly.

So, when will COE prices fall back down to below $20,000? Will they ever? The short answer is probably - and sooner than you think.

Again, this has to do with COE supply, which will start to rise as the enormous cohort of cars registered during the COE boom years of 2003-2008 come of age and are scrapped. (COE supply is determined largely by the number of vehicles taken off the road.)



Scrapping bonanza

If you look at the age profile of passenger cars on the road today, you will get a pretty good idea of when this scrapping bonanza will start to happen. The first wave is likely to take place between mid-2013 and early-2014.

The next wave - a bigger one - will be in 2015. And by 2016, we should see COE supply reaching tsunami scale. This will be followed by a couple more years of sizeable quotas before supply starts to shrink yet again.

Barring a fundamental change to the way COE supply is determined, car buyers and sellers will continue to experience a feast-and-famine situation. COE premiums and corresponding new car prices will continue to fluctuate from year to year.

The savvy consumer should align himself or herself to this cycle which, if you'd notice, makes a full circle once every 10 years.