COE crashed!

Singapore November 19th, 2008

Well, I was probably amongst the first non-dealers who got hold of the news. My phone probably started ringing non-stop from my dealers who had been working on sweetening the deal for me. What was more frustrating was… I had this tinge to actually bid for my own COE today, just that it slipped my mind amidst my unbelievably packed schedule for the past couple of weeks. If staying in hospital was holiday, then life after discharge was almost a living hell.

Work in the day… work in the evening… work at night. Bah! I am almost going down… from a graceful swam to a sinking submarine.

Life had literally took a sharp turn downwards since about a month ago, when I ended up holding more than 7 jobs at one time. Now, really, I mean 7 different roles, but then again, it doesn’t make much of a difference anyway.

Today is a rarity for me to blog because the COE @ $2 is something really close to my heart… and my pocket. You see, because of this slip, I would be spending another $13,000 on a piece of paper for nothing. Sigh. That’s the reality of life in Singapore. Nonetheless, since I didn’t get my COE, I might as well do some speculation on what could have caused the fall.

Firstly, a lot of dealers (particularly parallel importers?) could be holding back their cars because the Singapore dollar has fallen against the Yen. By doing so, they may be able to sell these residual cars with the new imports, which will probably go at about $4,000 extra due to the exchange rate. So, if they have 10 old imports, these can probably sell for an extra $40,000 in all? I am not sure; just pure speculation. Now, because of this holding back, the number of bids would thus be lesser and hence the $2 COE.

Secondly, a lot of loan applications could probably be under processing due to the large number of defaults. Banks may be more careful of who they lend money to now and perhaps more stringent checks may be done. Damn, my bank knows every single detail of my credit history. I wonder what else they store there.

Thirdly… well, it is a recession now, isn’t it? Then again, everyone’s still going on holiday, buying cool stuffs, flying here and there, and all. In fact, I see more Ferraris and Lamborghinis on the streets then I ever did. Maybe… just maybe, someone just bought those at 50% the original owners who were desperate enough to get some cash out.

Anyway, I am still figuring out… Honda Fit or Honda Airwave?

COE crashes to $2

The other categories all ended much lower too

By Christopher Tan, Senior Correspondent

WHAT is thought to be impossible in an open bidding system has happened: COE has crashed.

At the close of the latest tender on Wednesday, COE premium for cars up to 1,600cc – the mainstay of car buyers – closed at an unprecedented $2.

Motor traders were shocked. All said the market was soft, but no one expected the price to crash.

The number of bids submitted exceeded the COE supply of 1,851 by only one.

The other categories all ended much lower as well.

COE for cars above 1,600cc closed at $4,889 – almost half the previous value. The Open COE, which can be used for any vehicle type, ended at $6,889 – down from $10,490 before.

COE for commercial vehicles finished at $6,189, from $8,889; and motorbike COE dipped to $1,012, from $1,509 previously.

It is the first time that a COE premium for cars has fallen to rock-bottom. The last time car COE came this close was in December 1997, when the premium for big cars plunged to $50.

Observers, however, pointed out that that was during a closed bidding system, when bidders could not see what the prevailing bids in a tender were. In a way, they were bidding blind, they said.

Soon after the $50 result, the system was changed to an open-bidding platform. In this system, bidders could see the value of bids being submitted, and thus could base their decision on the prevailing demand.

The other time when the market witnessed a COE crash was in early 2007, when premium for commercial vehicles hit $1 for six consecutive tenders.

This was because many commercial vehicle sellers could not get their supply of new models that would meet a new emission standard the Government pushed through.

Sales of new commercial vehicles almost ground to a halt, resulting in the COE crashes.

The latest crash may not benefit everyone though. Car owners planning to sell their vehicles will have to stomach much lower resale values. Used car dealers, already jittery over a high inventory, will not be willing to take in more cars.

This will create a viscious circle, as folks who cannot sell their existing cars won’t be looking for a new one any time soon.

Source: Straits Times Interactive, http://www.straitstimes.com/Breaking%2BNews/Singapore/Story/STIStory_304229.html

Article extracted on 19th November 2008



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