LTA Stops COE Bidding for April | What Does This Mean?
LTA has taken the never heard of step of stopping the COE bidding for the whole month of April 2020 and this was announced in a media release on Sunday the 5th of April. The situation now is laced with a lot of uncertainty as the LTA weighs the cost and repercussions of their decision to suspend the COE bidding,
What is affected other than COE and the registration of new cars? Here’s a few items we can think of that are affected, of which SG Cash N Cars is most concerned about the immediate ramifications in number 1:
1. COE Renewal Prices for the Month of May 2020
COE renewal prices are calculated for the month of May based on the 6 bids of the three months prior to may, and those are February, March and April of 2020. This means there is no April results to calculate from.
Will car owners who are looking to renew COE be overjoyed, if LTA calculates based on $0 COE price levels for April and so result in a skewed and especially low value for COE for the month of May 2020 renewal?
I hoped so, but even before we checked with LTA, the answer in my mind was “Fat Chance!”
Having reached out to LTA on their hotline, they have refused to give a direct answer and we were told to write in for an answer.
The answer, for now and is not yet firm, is that May PQP will follow the prices of April PQP (not April COE – at the risk of sounding repetitive, we say again, there is no April COE bidding). That wording in LTA’s reply, we understand to mean, is that May COE renewal cost will be exactly the same price as the April PQP. (This removes the need for our monthly COE Renewal Price Prediction article!)
Latest Update: LTA has made a firm decision on this question
2. Next Issue, How About June PQP and July PQP?
Since PQP is calculated from the prior three months, April non COE bidding will also affect the PQP for June and July COE renewal pricing.
If we follow LTA’s reply for May’s PQP remaining the same as for April’s, then if we extrapolate correctly LTA’s email reply on May’s PQP, that means PQP will be exactly the same for June and July as well?
Seems a little strange to us that no calculation is applied at for three months, if, and that is a big if, in May COE bidding resumes. We will have a situation where bidding returns to normal, and PQP becomes stagnant.
We cannot tell for now given then uncertain Covid-19 situation, but if that should be the case, then would the general public be very displeased with the pricing that follows April’s PQP rate, if indeed May COE bidding is lower? And we are guessing, May is going to go down, for sure, with the showrooms closed for one whole month!
3. How Will COE Bidding Be Resumed?
Given that COE bidding will likely be weak in the month of May (or later, if the Circuit Breaker continues), due to showrooms remaining closed during this period, how will COE bidding be carried out when it does resume?
Are we going to see $1 COEs if there is no demand from car distributors, seeing that showroom traffic has been a big zero?
Or are we going to see LTA reduce available COE quantity for the opening bid or even next few bids, until demand more or less returns to normal?
The reduction of quota is something we predict may happen, unless there is pent up demand from customers virtually browsing cars at home and a lot of people signing up on the dotted line immediately after the Circuit Breake. What’s the chances of that? We think it’s slim. Cars are a touch and feel, test drive item. They are not likely to sell on pictures, no matter how good the websites showing the cars are. And without a salesperson to talk through the loan portion and discounts available, it’s tough to sell online alone.
4, Loan Operations Paused or Severely Restricted for Some Finance Insitutions
We know of many finance institutions that have chosen to pause all operations at this time, such as Tokyo Century Leasing, Hitachi Capital and also smaller in house finance companies, some of whom we have spoken to saying essential part of their operations such as for the approval for disbursement of loan amounts are not quite possible without the use of their office.
Some of these finance companies have applied for exemption from the Circuit Breaker restrictions but the government has not replied since their submission (as of 8th April 2020).
Others like Maybank are also scaling down with six branches shut from the start of this period and two more branches closed from next week onwards. Car dealers will know that Textile Centre branch is the one for car loan full settlement.
But We Are Still Working
And we can help you with your submissions for COE renewal loans and other vehicle loans with those financial institutions that have found a way to work during this period.
If you are looking for COE renewal loan at this time because your COE is expiring, we can still help albeit with less options on financial institutions choices than before. So click to WhatsApp us with your request or leave us your info on the contact form at the bottom of this page
Each day we keep in touch to see which finance company has obtain exemption to work and periodically with LTA to know what is the latest on their position for the COE bidding and PQP. And we will keep you informed as the authority comes back with a decision on how they are going to proceed.