Vehicle growth rate to be cut from Feb 2015 to Jan 2018, but more COEs to be released

By Adrian Lim, The Straits Times, 17 Oct 2014

THE annual vehicle growth rate will be halved to 0.25 per cent, down from the current 0.5 per cent, as the number of vehicles on the road nears one million.

But car buyers need not rush to showrooms before the cut, stress industry observers, as the cut will be cushioned by the bumper crop of cars being deregistered over the next few years.

Certificates of entitlement (COEs) that are released every quarter are determined primarily by the number of cars that are deregistered in the preceding months.

The cut will be in effect from February 2015 to January 2018. The Land Transport Authority (LTA) will review this in 2017.

This is the third such adjustment to the vehicle growth rate. In 2012, it was cut from 1.5 to 1 per cent, before being reduced again to 0.5 per cent last year.

The LTA said in a statement yesterday that with 12 per cent of Singapore's land area already taken up by roads, there was limited scope to further expand the road network. And it was "not tenable to keep to the same rates of vehicle population growth as before".

National University of Singapore transport researcher Lee Der Horng said the latest cut is likely a "precautionary" measure, in view of an expected surge in the COE supply. The highest number of COEs was available between 2004 and 2008, and these vehicles are now approaching their 10-year mark. Their COEs will be recycled back into the bidding process.

The president of the Singapore Vehicle Traders Association, Mr Neo Tiam Ting, estimates that there will be around 100,000 cars deregistered annually over the next four years. This means COE prices - currently $64,000 for small cars and $72,000 for bigger ones - are likely to drop gradually in the long run, say experts.

SIM University's urban transport management expert Park Byung Joon said: "As more COEs become available in the market... over the long term, prices will be on a downward trend."

However, he cautioned that the Government may "save" some of the COEs to "smooth out the supply" when there is a crunch.

The move to cut vehicle growth comes as LTA said it would release 5.3 per cent more COEs in the next quarter, or 3,977 a month.

LTA also said it would reduce the contribution rate of COEs to the Open category, from the current 15 per cent to 10 per cent from next February. Industry watchers say this should further soften COE prices for small cars, up to 1,600cc and 130bhp, but push up premiums for larger cars, as Open category COEs are mainly used for luxury cars.

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More COEs available in next quarter
By Adrian Lim, The Straits Times, 17 Oct 2014

THERE will be more certificates of entitlement (COEs) available from next month to January next year.

Each month in the next three months, 3,977 COEs will be put up for bidding, a 5.3 per cent increase from the current quota.

For the small car category, the monthly COE quota will be almost doubled, compared with that in the same period a year ago.

The increase in COEs available is mainly due to more cars being deregistered in preceding months.

Owners who bought cars between 2004 and 2008 - when the COE numbers were high - will have to deregister them soon.

In general, the supply of car COEs will increase by 10 per cent to 22 per cent in the next quarter.

For the small car category, or cars up to 1,600cc and 130bhp, there will be 1,396 COEs available each month, up from 1,143.

For larger cars, or those above 1,600cc or 130bhp, there will be 1,138 COEs for bidding, up from 1,010.

For the open category, which covers any vehicle type but usually ends up being used for big cars, the COE quota will be 527 a month, up from 478.

There will be 634 COEs a month for motorcycles in the coming quarter, up from 631 previously.

The category for commercial and goods vehicles is the only one to see a drop in COEs available monthly - from 515 to 282.

The Land Transport Authority said this is because COEs in this category are being made available directly to the market through the Early Turnover Scheme, which gives owners of old, pollutive vehicles pro-rated COE premiums when they deregister their vehicles early.

Vehicle replacements under the scheme as a proportion of deregistrations has increased to 70 per cent for the coming quota, up from 16 per cent in the February to April quota this year.

Despite the increase in COE availability, car dealers expect prices to remain firm due to seasonal demand.

Singapore Vehicle Traders Association president Neo Tiam Ting said: "Typically, demand is about 10 per cent to 20 per cent higher around the year end. People like to buy cars during the Christmas and New Year period, and before Chinese New Year."

Mr Victor Kwan, managing director of Wearnes Automotive, said there will also be many who have scrapped their cars and are looking for new ones.

At the close of the latest COE bidding exercise last week, premiums for small cars finished at $63,880.

Those for big cars ended at $72,180.

The COE price for the open category was $72,003.