Feast or Famine A vicious cycle
"Feast" in yesteryears - Bumper crop of COEs from 2004 - 2008. COEs are valid for ten years, so the first of these bumper crop COEs will expire in 2014.
Now in the "Famine" cycle - Supply tightening began in 2009. During the "feast" years, there were more than 2,000 Category A COEs available for each bidding exercise. The Category A quota has since trickled down to 300+ COEs per bidding exercise (November 2012 onwards).
The Motor Traders Association (MTA) also noted the "feast or famine" cycle in its letter to
LTA.
As the bumper crop COEs expire, will the
LTA release them back into the market?
LTA dropped a strong hint that they intend to increase
COE quotas. From February 2014,
LTA will reduce the 6-monthly recycling period for determining
COE quota to 3-monthly. A shorter recycling period will enable prompt matching of the number of new COEs to be issued to replace de-registered vehicles.
However, if the bumper crop is released back into the market, the symptons are alleviated but the root cause remains. The famine will return (quite timely after GE2016). Is it fair for people to pay wildly different prices for the same
COE in the space of a few years? The
LTA will lose a golden opportunity to end the "feast or famine" cycle and replace it with a more steady supply of COEs. We are kicking the can down the road.