COE Renewal Price Cat A, B & C | May 2021 PQP Results
Exciting action on COE bidding, albeit not at all favourable to those looking to purchase a car and not a happy outcome for car sales persons who work with the bread and butter makes. Perhaps they would choose a different word to describe the price hike, like “tumultuous”.
Afterall, it is such high COE prices that put the budget China brands out of business in Singapore – the buyer segment looking for budget cars is totally priced out of the market by COE, resulting in low or even no sales.
The COE is up, and sharply higher, for Cat B. This has to be a record jump, for I cannot remember the last time such a big increase happened.
These are the actual numbers for the latest COE bid
COE Bidding Result 2nd Bid of April 2021
Cat A $49,640
Price of Cat A COE went up, by $4,040 (+8.86%). This is now the fourth consecutive increase in Cat A prices and also the largest increase of all of these four increases.
This is a strong sign of, likely, continued upward momentum as not only did it not take a rest after three increases, it took the largest jump on the fourth increase.
There were be quite a number of bids put in by bidders that failed to secure a COE this round, and those bidders will still be there to try to get their COE in the coming bids. According to figures, 31.5% of Cat A bids were not successful this round.
We said this before and we continue to say – we still see upside to this in the mid to longer term, albeit with a breather once in a while.
Cat B $61,190
In this bid Cat B shot up $8,881 (+16.97%), and this latest bid is on top of the previous rise of $5,308 (+11.29%) in the early April bidding exercise. In just these two bids and the span of only one month, the combined increase is an amazing $14,189!
We mentioned two articles prior to this one that there was support for Cat B. And the one just prior to this article that “it seems this is showing more than just support, it is an upward climb with quite some momentum.”
We seem to have hit it the nail on the head, and yet, we are also still surprised by the speed and magnitude of this rise.
According to figures, 40.13% of Cat B bids were not successful this round, higher than Cat A ratio.
Cat C $44,001
Surprise (again?) that after Cat C fell by $3,455 or -8.73% last bid, it is now up by $7,867 (+21.77%).
Cat C has been doing this see saw price action as there has recently been so many changes affecting it. The new CVES ruling that kicked in on 1st April that caused it to go down last bid, but now up sharply again due to…
Let’s talk about this together with the other Categories.
Why Are We Witnessing A Major COE Rise?
The usual mentioned items we have often repeated in our previous articles we will only briefly mention – economic activity is picking up from the days of Circuit Breaker, plus growth in some sectors spurred by Covid-19, such as the rise of online shopping and need for parcel deliveries, which has spurred the need for commercial vans.
But this latest rise is a sharp one and is caused by more than just the above. It is also about the supply and demand of COE.
Whilst demand is not sharply up from just one month ago, supply is down significantly from the prior quarter of (Feb 2021 – Apr 2021), which in itself, was a reduction from the quarter before that (Nov 2020 -Jan 2021).
How much has COE supply been cut and which category is the worst hit? This is the picture for all vehicle categories with four wheels or more.
COE Quota Reduction Percentage Wise and Quantity Wise
We are looking at reductions in all of these above categories with the hardest hit being Cat C, percent wise. This percentage is quite shocking, and I think this has led to the latest round COE bids charging up for Cat C, as dealers want to get their hands on some COE so that they can continue to sell vehicles without being hindered by a lack of COE in the coming months.
Quantity wise, Cat B is the hardest hit, and it is going to have 265 fewer COE per month for the quarter starting May 2021. The release of this info by LTA before the second bid of April has also led to dealers scrambling to bid higher for their customers in order to guarantee they can deliver at least some portion of their orders, before all their orders go into the limbo of indecision, where the COE is too high to deliver the vehicle to the customer without a loss.
If such a situation happens, and I believe has already happened for many distributors due to the magnitude of the latest COE price rise, they would need to ask the customers to do a COE top up.
If customers are undecided whether to fork out more for their car, they will likely fall out of the purchase with no car delivered by the end of the number of bids allowed for in the sale agreement (assuming the COE remains high). This is a loss for car distributors.
The bad news for them is, I feel, COE remaining high seems to be the most likely scenario, given that the COE quota will last for up to end of July 2021.
May 2021 COE Renewal Price Results
These are the COE renewal rates for next month, May 2021.
Prices shown below are for 10-year COE renewal prices for April 2021.
You pay half the amount for a 5 year COE renewal or rounded up to the next dollar if there are any cents after it is divided by two. However, should you consider a 5 year COE renewal?
And here’s a tip on how to save on renewal! Click here.
Below are the prices for May 2021 renewal.
Cat A $44,138
Up by $1,855 (+4.39%) compared to April 2021 COE renewal price. This is the ninth straight increase for Cat A COE renewal prices. we have not seen a COE renewal price decrease month on month since September of 2020.
And it don’t look like the situation will change for at least the short term.
Cat B $49,716
Up by $2,400 (+5.07%) compared to the renewal price of April 2021. Last month was the first decrease in Cat B COE renewal prices after seven straight price increases, and this month of May 2021 it is back to its usual uptrend again.
In nine month period, there were eight months of increase and only one month of decrease in COE renewal price for Cat B.
Cat C $40,522
Up by $540 compared to the PQP of April 2021.
This, like the other two categories above, is also another increase in a long line of increases starting from way back in October 2020, which started its rise one month after the two car categories (A & B) started to move up.
Where Does This Leave The COE Renewal People?
If you are not worried, or maybe haven’t realised it yet, then you should start to be. The prices for COE renewal will follow the prices of COE bids, with the effect of the higher bids factoring into the COE renewal price (also called PQP), and they tend to align, because the PQP is a moving average of the COE bids.
Imagine this, if COE now stayed at $61,690 for Cat B for the next six bids, the current Cat B COE renewal price will move closer and closer to this value and by the end of three months will be exactly the same at $61,690. This is what I mean by it tends to move towards the latest COE prices.
But of course, COE bids never stay the same, but if they hover at that level, the COE renewal price will also be tending towards that price.
What does it look like for the month after May 2021? If you need help on this, please do contact us using the form on this page or click on the WhatsApp button.
We say, we believe we have been helpful for our past COE renewal customers. Not just us, that’s also what those who have used our services say. We are flattered, but we do try our best to be as useful at this confusing time as possible. For many of our customers they only experience COE renewal maybe once in 10 years and for most this is their first time.
But, don’t worry too much! We are your friend in this and will have things sorted out for you the best we can.
Contact us early so it is not a rush and so you can make use of our free included PQP monitoring to your advantage!
Use the contact form on this page or click Whatsapp to reach out to us, we are happy to be of help to any and all for your COE renewal loan!
Did you know? Sometimes a lower interest rate loan can cost more than a loan with slightly higher interest! But we will be here to assist, so don’t worry!