June PQP 2018 And Near Term Outlook

Interesting how the PQP looks at the moment as we are seeing the PQP rise for the first time in quite some time. COE bids always lead the PQP results, so this means a stabilization of Cat A? The results for June PQP have been calculated a few days back and for your info, they are now standing at the following for the month of May 2018:

Cat A – UP $22 from May, $38,214
Cat B – DOWN $806 from May, $37,906 
Cat C – DOWN $2012 from May, $33,717

As Cat B and C fall once again, it seems the Cat A has reached a point where it may maintain at this level.

Our Forecast for Cat A

These are the factors we are considering as we look ahead to the June COE bids coming in. Factors that are increasing demand for Cat A are the general prudence of buyers for new cars as the economy is still finding its footing, this includes those who previously may have been looking at more upmarket Cat B vehicles. Secondly, the rush by some dealers and official distributors to get cars registered before the 1st of July (when VES for PM 2.5 kicks in) may prompt them to bid with more determination.

But mitigating the upward pressures from these two factors are the flood of cheap pre-owned cars from Lion City Rental or Uber being released to the market at a loss – but a benefit to buyers – as they withdraw their operations from Singapore. This will no doubt lessen the demand for new cars as pragmatic buyers go for almost new cars being sold at significant discounts.

With these factors working against each other, we expect Cat A to stay at about the same levels for the month of July 2018 PQP.

Our Forecast for Cat B

For Cat B, which buyers may be moving away from and going into sensible budget vehicles in Cat A, we see the COE bids remain at about the same also because of the rush to register before the PM2.5 kicks in on 1st of July. This should cancel out each other and provide a stable month of June COE bids. Therefore, we also see Cat B PQP at about the same levels in July as for the month of June 2018.

Our Forecast for Cat C

Cat C has had an unexpectedly weak showing at the latest COE bidding exercise for the second bid of May, so the continuing trend of PQP decline remains. This may be due to the soft economy and the making do with lesser vehicles in a company’s fleet and the fact that there is less need for a company to show it is using the latest model commercial vehicles as compared to a private vehicle for personal use. Hence, we continue to see a decline in the PQP for this category going into the month of July.

Your thoughts?

What do you think of our forecast going into the second half of 2018? Do you think differently from what we have predicted above?

Let us know your thoughts.