Post Election COE Renewal Price | PQP Prediction for August 2020
Some people say that COE prices, and hence COE renewal prices, will dip when there is an election. And indeed, we feel there is some truth in that – the LTA did release more COE for bid in the early July bid, the first one after Circuit Breaker stoppage of COE bidding.
There was up to 33.5% more COE across the categories for the month of July as compared to the last bid (more on the COE quota quantity in our previous article), way back in March 2020.
Many were expecting a fall in prices, given the economic fallout of a Covid-19 situation, but the bid prices went up instead! What happened?
Closing Bid Prices for the First COE Bid of July 2020:
Cat A $33,520
Up by $2,310 (+7.40%) in this first bid after CB, compared to the last Cat A in March 2020.
Cat B $35,889
Up by $5,877 (+19.58%) in this first bid after CB, compared to the last Cat B in March 2020.
Cat C $24,502
Up by $2,500 (+11.36%) in this first bid after CB, compared to the last Cat C in March 2020.
Significant or Modest Increase in COE Bidding Prices?
We would like to call the double digit percentage increase in COE prices as significant. But in the article from Straits Times here, they say market observers call it “modest”. I’m a market observer too. But hey, they are big media, and we are small. They shout but we whisper.
However, we think that it’s because they have to make things look rosy just before polling day, like half priced grapes at NTUC and cheap coffee for NTUC members at coffee shops.
Our guess is they were not expecting the “significant” increase either, given the extra 33% available COE coupled with closed car showrooms, so the double digit percentage increase, they are calling it “modest”, to placate anyone not expecting such a rise.
Whatever is the choice of words, it’s good news overall, perhaps we are not as badly affected by this Covid-19 after all? Perhaps our we are still getting along and most of our population have kept their jobs and income.
Pent Up Demand Led To COE Price Increase?
In our earlier article from June 18th, we were looking at the factors that will move the COE either up or down. So where did we miscalculate?
This is where we did not keep our ears close enough to the ground – car sales. Where we just assumed that car sales would stagnate, the dealerships were still selling cars with showrooms totally closed.
Kah Motor Honda sold 200+ cars during the CB period and similarly, we now also hear larger parallel importers had continued to ink deals with buyers.
Many of those deals were closed based on a lower expected COE, where the customer is sold the car at a price of “if the COE is $xxxxx”. Many buyers went ahead and signed on the deals in anticipation of lower COE at about $10,000.
With the COE at this price, the selling prices for everyday cars would be significantly lower than usual, looking like the Great Singapore Sale for makes from Honda, Toyota, Mazda and so on.
So what have the potential buyers to lose? They went in for the opportunity to get a car on the cheap, with a worst case scenario of receiving their deposit money back after maybe 6 or 8 unsuccessful bids.
Car Order Books Full With No Way to Deliver
So, the dealerships car order books filled over a period of two months, to more than 1.33 times the usual bi-weekly sales (we usually have a COE bid every two weeks). And they could not deliver, because there were no COE available. That plus workers could not work from home to prepare a car.
So although we had 1.33 times more COE than usual for the first bid of July 2020, it is less than the demand over the two month period. So a rise in the COE should have been expected.
Now that we think of it, it wasn’t too difficult was it? Given the long period to collect sales but only a small increase in the number of extra COEs.
Our Singaporean appetite for cars has not diminished, it may be a good indication many are still secure in their jobs. For now.
Given this scenario, our guess is that there are still many orders in the books waiting to be filled. But it remains to be seen, how dealers can persuade customers to top up to get their car COE for those who signed at discounted prices. Or will these buyers just wait it out, and take back their deposits later?
COE Renewal Price PQP Prediction for August 2020
This is the PQP price for August, calculated from the average bids. This is not from consecutive 3-months, but from February, March and July 2020.
And surprise again, our prediction is lower PQP for the month of August despite the rise in COE bidding price for first bid of July 2020.
Cat A $32,240
Down by $635 (-1.96%) for August PQP, compared to the last Cat A in July 2020. Which is the same price PQP since April.
Cat B $32,881
Down by $688 (-2.04%) for August PQP, compared to the last Cat B in July 2020.
Cat C $24,120
Down by $151 (-0.62%) for August PQP, compared to the last Cat C in March 2020.
Surprised the PQP is still headed down after the recent COE significant rise? PQP is not always as easy to read and anticipate just by looking at the latest bid for COE.
Help With PQP Monitoring for COE Renewal
If you are looking for COE renewal and and loan to do that but are not sure where PQP price is headed, feel free to give us a ring during office hours at 92782880, we would be happy to assist you.
Alternatively, you could WhatApp the the same number or use our web form below or on the right to get our attention.
Knowing the price direction and when to renew with our professional advice, is bound to give you a better chance to renew it at a lower price than just renewing blindly. So, speak to us soon!