Buying A Car At The Low
Don’t we all love a bargain? If a car can cost $10,ooo less than one week ago (talking about COE drops like the first Cat A bid of January 2016), wouldn’t we all want to get in on the deal? It sure seems that way, with showrooms like Borneo filling up and crowds just waiting for (and, may I add, not getting) a test drive. There’s just too many people. Just sign on the cheque and the papers, the sales persons will say.
This is where news such as this gets us car buyers here in Singapore all worked up. And I cannot believe how many of these buyers are thinking they can score a good deal after the dip.
Just think about the mechanics of how this works for a moment.
The COE Price Supply and Demand Driven
That means if there is strong demand for COEs of say small cars, the prices of that particular category will rise. If the bustling crowd at the showrooms are anything to go by, it is my estimation that the next COE bid of January 2016 will have almost double the number of bids and prices will jump right up, leaving buyers who thought they could get in still on the sidelines – with their deposit still in the hands of dealers or distributors.
This sort of knee jerk reaction will likely only result in maintaining of the COE returning to higher levels. (I’ve already been proven right, second January 2016 Cat A result ended at $51,301 – you can check here)
Which leads me to classic song by Elvis about rushing in that you may be familiar with.
Good to go back in time with that song, but let’s leave retro behind for a while and get back to the topic of COEs.
“Those Who Got The January COE Are So Lucky!”
Laments the ignorant buyer still on the sideline.
When you consider those who are “fortunate” and got in on the good deal of the $45,002 COE from first bid of January, how did they – thank their luck stars – get it? Just plain old luck for some.
But then again, are they really lucky? Should a buyer be happy getting his new car with a lower COE?
A lot of those who placed orders for this first January 2016 bid, placed when prices were advertised at the dealers or distributors for higher. The buyers have only partially benefited, but really the distributors took a large percentage of the benefit from the low COE rebate levels that were set together with the contract buyers signed.
Those who are not familiar, COE rebate is the level at which distributors will refund you if your car COE ends up below. Example, if the COE rebate was set at $48,000, those who got their cars this round of COE bidding only received a “rebate” of $2998. Nice tidy sum, not bad? Yes, not bad for the distributors. They were ready to sell the car at a $55,000 COE, now they have earned an additional $7,000.
And the buyer gets ownership of a car with low COE, affecting future resale value as well as COE rebate, touch wood, should it needs to be scrapped/exported early. Resale values are going to be at least slightly affected with this first bid being the fluke, and second bid for Cat A in January 2016 returning to above $50,000. If I were shopping for a used car and given the same model, dollar for dollar at the same price, I would avoid taking the one with lower COE.
Playing Smarter Than The Next Door Aunty
If you are wondering where this leads and if there is a way that as a buyer of the car, you can actually get more savings out of the situation than the above situation permits, well, yes! Follow the below advice.
- Never get in on the action immediately after the COE dips sharply. It doesn’t help and you don’t get the price you want. Most main distributors, like Cycle and Carriage, will hold your deposit for up to 8 bids. Which ties you down and you cannot go elsewhere to buy a car. (Some dealers also strangely, are able to promise lower prices, i.e., reduce their prices when COEs go up – beware! This is another story for a different post)
- The people who got the lower COE placed their orders with a dealer in advance of the drop, you should consider doing the same, especially when LTA announces that there will be more COEs released in the coming three months.
- If you want to do No. 2 above, go around looking for a distributor or dealer who tells you exactly what they will be bidding at, so that if COE for the category that you need falls below their bid price, you know immediately that you got it. Why? Because there are those who will make excuses and hope for a lower COE so that they (not you) benefit from the chance of a lower COE bid – after all they have up to 6 chances/bids or whichever was stated in the agreement. Make sure they are willing to put down their COE bid price in the sales contract.
- Make sure you read the fine print and know the COE rebate level that they are giving you. Hopefully you’ll find a figure that is not too far from the current COE price. Which then means you will get most of the rebate or discount should the COE fall again by $10,000!
- Better still, look out for those dealers who will allow you to bid for at the price you want.
Those are our thoughts, let us know if you feel the same or have any comment below.
We go by our own advice and will do for you what we have advocated above. So in case you are looking for a new car, feel free to reach out to us using the contact form on the right side or SMS/Whatsapp/call 92782880 for a friendly chat.
And if you are looking for a car loan, or advice on other car matters such as insurance, do drop us a note using the form on the right or bottom of this page, and we will be sure to get back to you soon.