With the huge number of car deregistration, there will also be a huge number of replacement demand for new cars. Hence, the increase in COEs in May - July 2015 will be met by replacement demand plus new demand from new buyers. There will also be buyers who plan to sell their 5 year old car or older to buy now instead of 2018 and beyond as we can expect
COE to hit $100k and above in 2018 and beyond since there is no clawback.
There is also the issue of additional demand from:
1. New buyers who now can afford as family income increased. 10 years ago, not many families have household income of $100k pa but nowadays it is common for households to have income of $100k pa or more. These households would aspire to buy a new car to show that they have progressed. These families can afford a $100k car as the depreciation cost is only $10k pa. They can still collect the PARF value when they scrap their cars. $10k pa is affordable as it only represent 10% of their household income per year.
2. Demand from BTO flat flippers. These people buy a BTO flat for $200k and then after MOP flip the flat for $450k. They make profit and can use the cash profit to buy a new car in cash.
3. Families are now buying two or more cars. These are rich people who got rich from their salaries, stocks, businesses and properties.
4. New graduates are now easily earning $100k pa so a top performing graduate couple can earn $200k pa easily. They can change to new cars every few years.
5. Many Singaporeans are rich.