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Old 20-04-2015, 08:11 PM
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Huge backlog of orders means COE likely to stay high: Analysts

By Xue Jianyue, TODAY
17 Apr 2015 07:18
URL: ://w w w.channelnewsasia.com/news/singapore/huge-backlog-of-orders/1789898.html

TODAY reports: Any drop in premiums is likely to be marginal in future bidding exercises, analysts and motor dealers say.

SINGAPORE: Despite the sharp rise in the COE quota for the next three months, those holding out for a reprieve from rising COE premiums are likely to be disappointed.

Any drop in premiums is likely to be marginal in future bidding exercises, analysts and motor dealers told TODAY.

A huge backlog of orders — many from owners of deregistered cars waiting for COE premiums to fall — will keep premiums high, said motor dealers, pointing to the large number of bids made by the end of the latest bidding exercise last week.

For example, more than 2,340 bids were made for only 988 small-car certificates, said Singapore Vehicle Traders Association (SVTA) honorary secretary Raymond Tang.

“There is still a lot of backlog in the market,” he said. “You have more than 14,000 COEs, but it is still not enough.”

Indeed, COE premiums have continued to climb despite the sizeable COE quota for February to April. The quota was the largest since last February until the latest crop announced on Thursday. Increases across the board were seen in the latest bidding exercise, with Open Category premiums at a 12-month high of S$78,000.

Customers are also rushing to buy vehicles before more stringent conditions kick in through rebates and surcharges under the Carbon Emissions-Based Vehicle Scheme (CEVS) on Jul 1, said CarTimes’ managing director Eddie Loo and SVTA president Neo Tiam Ting.

The CEVS is aimed at encouraging the purchase of low-carbon-emission vehicles. The carbon-dioxide limits will be lowered with the revision, which could mean rebate cuts or surcharge hikes.

“A lot are rushing in to register in order to get the higher rebate, and because of that, the actual drop in premiums will not be much,” said Mr Neo.

Currently, COE quotas are determined by the allowed annual vehicle growth rate of 0.25 per cent, the number of vehicle deregistrations, adjustments for changes in the taxi population, replacement of commercial vehicles under the Early Turnover Scheme and expired COEs.

Vehicle deregistrations make up the bulk of supply.

With many buyers unaware of these reasons and rushing in to bid, they contribute to the high premiums they are hoping to avoid, said National University of Singapore transport analyst Lee Der Horng.

The link between COE quota numbers and deregistration will cause fluctuations in the market when deregistration numbers fall around 2019, a situation which is “not healthy” for motor dealers and customers, he said.

“Consumers may face greater uncertainty in COE premiums. Dealers will need to adjust business operations to accommodate this increased demand. After a few years, they will need to slim down. What they want to have is a stable COE supply,” said Professor Lee.

Although the increase in COEs presents dealers with increased sales opportunities, dealers said they were mindful of pushing sales too aggressively with steep discounts.

“No point selling and not being able to deliver the car. It doesn’t look good on the car agent,” said Mr Loo.
Dear coward, go start your own thread lah..... That's why my mother said never be a politician and......... A car dealer lol
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