Price is determined by demand and supply. Even though supply of COEs expected to increase, demand will also increase as those who deregistered will want to buy a new car. On top of that, there will be people who previously do not have cars wanting to buy a new car. These are young graduate couples who earn a lot, families who have seen salaries increase and many more people want to buy a new car as a car not only provide convenience but it is also a status symbol. 85% of families live in HDB flats and since they cannot afford to upgrade to a condo, at least they can buy a new car to give them satisfaction of enjoying a luxury good. There are also families who made a lot of money after they sell their BTO flat (bought very cheap) after the MOP. They use part of the cash profit to buy a new car.

In the first Nov bidding, even though the Cat A COE supply was higher, price went up due to the strong pent up replacement demand. Many whose cars are 8 to 9 years old are already replacing with new cars before COE prices go up further.