We are entering into an interesting season for COE bidding.
Expectation and Reality
With the slow economy and revised lower growth numbers to prove it, where we had expected the market for COEs to remain soft, prices to meander directionless and with a downward tendency. But that was up until the announcement of COE quota shrinkage at the end of July for the August to October (both months inclusive) quarter for 2019.
Whilst we thought that a small shrink in quota numbers was coming up, the shock is that the cut back in COE was a lot more than expected. If you have not read from other headlines yet, these are the numbers we are looking at, compared to previous quarter May to July 2019:
Cat A now has 25.8% less COE
Cat B quota has shrunk by 8.6%
Cat C for vans is reduced by 27.3%
Open Cat has 5.3% fewer COE available for bidding
Why are there so few COE available for bidding?
(Ignore the red arrow until the end of this article)
According to data (see below), this was due to the record low number of car de-registrations of only 7,041 for Cat A (blue highlighted) in the previous months of April to June (which are used for calculation of the August to October quota), or if read the other way around, the record high number of cars that have had their COE renewed in the period April to June.
If you compare the latest deregistration figures with the previous quarters prior to this one the number of total de-registrations for Cat A are 9,485 (Jan to Mar 2019) and 10,993 (Oct to Dec 2018), you can see that the period in consideration which affects our August to October COE quota, the dereg figure of only 7,041 is much smaller, resulting in the lesser available numbers of COE in Cat A for bid.
Cat B wise, the shrinkage is less shocking than Cat A and C, as the total quarterly deregistration is only a few hundred less than the previous quarter’s so the reduction in quantity is only amounting to about 205 less COE per month or about 102 COE less per bid.
For the shrinkage in Cat C for commercial vehicles, this was partly due to the (supposed) end of the ETS (Early Turnover Scheme) and many dealers holding stock or owners who had old commercial vehicles that could benefit from ETS, went ahead to change them into new vehicles without the need to bid – they get their new vehicles according to the Cat C PQP rate less additional rebates that LTA grants for taking an old smoke generator off the road. A total of 1,818 went ahead to do ETS.
The ETS scheme was thought to have been coming to it’s end, because LTA had not yet announced an extension to the scheme, and so the rush to go ahead before the scheme ended.
What Is The Reaction To This Quota Announcement?
First bidding exercise of August 2019 tells some of the story,
Cat A Up $6,058
Cat B Up $595
Cat C Up $3,201
Cat E Up $623
Cat A and Cat C jump by thousands, as expected. Cat C jump is less even though percentage wise the shrink was even more than that of Cat A. This is probably due to the ETS effect, when owners have changed for new vehicles to be registered within a month of the old vehicle deregistrations. Which means many dealers may have on hand new registered vans on sale that came from ETS, dampening the demand for actual bidding when a new van is bought.
This Is A Knee Jerk Reaction?
Yes, could be. As with all sudden changes, the first reaction to the announcement is often driven by fear and anxiety and may settle down with the coming bids to a more stable level for Cat A and C.
Cat B remains relatively stable, and even with a close to 9% fall in available COE quantity, went up only less than $600.
We wait for the coming bids to know for sure where this is headed, but now, our overall view of the direction is this: Up.
After All That Info, Our Prediction for COE Renewal Price for September 2019
PQP Cat A Up, $29,852
Up by $524, compared to the month of August 2019’s COE renewal price.
PQP Cat B Down, $38,257
Down by $1679, compared to the month of August 2019’s COE renewal price.
PQP Cat C Up, $26,207
Up by $98, compared to the month of August 2019’s COE renewal price.
Are you surprised PQP is not moving by much compared to the previous month’s price?
The prices for Cat C don’t move by much, and Cat A is up by only half a grand. Why? Thanks to the effect of averaging, the movement is dampened. So some cheer there, even though the Cat A actual COE has shot up!
And in fact, we are seeing (predicting) a reduction by a four figure value for Cat B while the August Cat B prices rise! This is due to the Cat B month of May that has dropped out of the calculation for the month of September – and those two bids in May were high at $42k and 48k respectively.
The relationship between COE renewal price and the actual bids can be quite varied and confusing. We can only explain so much here. If you are looking to renew your car’s COE and it is coming up in the next month or the next few months to come, the best move you can make is to contact us with your need, and let us do the PQP monitoring for you.
We have helped dozens of our customers renew their COE successfully through PQP monitoring and they have made payment at advantageous time saving some of them thousands.
To find out more, give us a call at 92782880 during office hours, or WhatApp button and leave us a text message anytime. We are always happy to help, the more we save for our customers, the more satisfied we are with ourselves!
Bonus “End Credits Scene” COE Riddle
Look at the first Monthly COE Quota Chart For August 2019 to October 2019.
Who is able to tell us the reason for so many people, 457 of them as shown by the red arrow, who bid for and got the Cat D COE, but then did not use it to register for any motorcycle at all?
Leave your comments to let us know your thoughts!