SINGAPORE – After certificate of entitlement (COE) prices fell across the board two weeks ago, premiums for larger cars and the Open category rebounded at the latest exercise that closed on Nov 22.

The premium for Category B, for larger, more powerful cars and electric vehicles (EVs), ended at $135,336, a 23.03 per cent increase from the $110,001 recorded on Nov 8. This was, however, still below the $150,001 record set in October.

The Open category COE price came in at $135,002, up 7.99 per cent from $125,011 two weeks ago.

Although such COEs can be used to register any vehicle type except motorcycles, they end up being used mostly for bigger cars. The premium for the Open category also reached a record in October at $158,004.

The COE premium for Category A, for smaller, less powerful cars and EVs, fell to $85,001. This is an 11.17 per cent drop from $95,689 recorded at the last exercise.

The commercial vehicle COE premium dipped by 5.27 per cent to end at $73,889, down from $78,001.

The motorcycle COE premium came in at $10,001, down 8.16 per cent from $10,889.

Motor traders said they expected COE prices to rebound after the sharp drop two weeks ago, though not to the extent seen in the latest exercise.

Ms Sabrina Sng, managing director of EV brand Polestar and sports carmaker Lotus at multi-franchise motor group Wearnes Automotive, likened the rebound of about $25,000 for Category B to a “yo-yo”, coming after the premium plunged $40,000 in the Nov 8 exercise – the first under a new quota period with a bigger COE supply.

She said the increase reflected an influx of demand.

A sales manager at another dealership, who did not want to be named because he was not authorised to speak to reporters, described the extent of the Category B rebound as a “huge setback”, as the latest premium is near what it was in September and not too far from its record high. At the final tender exercise in September, the premium was $140,889.

Mr Neo Nam Heng, adviser to the Automobile Importer and Exporter Association, said its members had expected the Category B premium to rebound only by about $10,000.

Ms Corinne Chua, Wearnes Automotive’s managing director for Volvo Cars, pointed to the 590 unsuccessful bids for Category B COEs in the latest exercise, which could indicate demand that will likely spill over into the next exercise.

At the latest tender, there were 1,228 bids for Category B COEs, significantly more than the 402 to 853 bids recorded in earlier exercises in 2023.

Industry insiders said there could have been bidders holding COEs secured in October, at the record premium of $150,001, who were looking to secure a cheaper COE at this exercise. They would have had to forfeit their $10,000 bid deposit by letting their pricier COEs lapse.

Mr Nicholas Wong, general manager of Honda agent Kah Motor, called the latest tender results “puzzling”, given the big difference of about $50,000 between Category A and Category B premiums.

While Category B COEs are associated with luxury cars, Mr Wong said there are also many mass-market automobiles – especially hybrid models – that qualify for such COEs. “What we want is for all COEs to be priced lower, not just for Category A,” he added.

Mr Wong believes consumers eyeing smaller cars in Category A may be waiting for prices to drop further before committing to a purchase.

He also noted that since the last exercise, prices of some cars in this category have come down by nearly $10,000, limiting dealers’ ability to put in higher bids at the latest COE tender.

Some industry watchers also attributed the outsize rebound in Category B premium to a rush by dealers to achieve their year-end sales targets.

There is also pressure to register some cars in 2023 before these models lose hefty subsidies under a revised vehicular emissions scheme that will kick in from January 2024. A stricter emissions testing regime will also apply from 2024. The expected cost difference is $10,000 or more, depending on the car model.

Information on how specific models will fare under the new testing protocol has not yet been published. However, some dealerships have been telling customers that their petrol-hybrid models will be affected.

Dr Victor Kwan, a senior lecturer at the Singapore University of Social Sciences, believes dealers should still be able to stomach the rebound this time around, since the prices of new Category B cars were not lowered to the full extent of the $40,000 drop at the previous tender.

Dealers typically build in some buffer, so that they can place higher bids in subsequent exercises to secure COEs and deliver new cars.

Dr Kwan, who was in the motor trade for more than 20 years, expects the Category B COE premium to be “on a gentle downward trend” over time.