While supply may increase, demand will increase more than supply due to these factors:

1. There are 100,000 car owners looking to change to new cars in 2015 and another 100,000 car owners changing to new cars in 2016. This is the demand only from current car owners.

2. Additional demand for new cars will come from new drivers, especially young graduates with high income.

3. Increase in population.

4. Families looking to buy their 2nd and 3rd cars. This is becoming very common as families get more affluent. For instance, if you have two high income executive couple, each of them would NEED a car for their work.

5. Even not so high income families can buy a new car after they flip their BTO flats. For instance, the bought their BTO flat at $200k five years ago and now they sell it for $500k. They will then get a profit of $300k which they can use to buy a brand new car. That is why you see so many new cars in HDB estates, sometimes difficult to get parking especially when families have two or three cars per household.

6. More families are getting richer. Ten years ago, their household income maybe only $100k pa but ten years fast forward, their household income is now $200k pa or more. With this kind of income, buying a $100k car is no big deal. $70k COE is cheap relative to their household income. $70k COE means only $7k pa, which is only 3.5% of their $200k annual income.

In summary, you can expect high demand which will be higher than supply. COE prices will inevitably rise.