8-1-2024 (SINGAPORE) Despite the persistent rain, car showrooms along Leng Kee Road and Alexandra Road experienced a significant increase in visitor numbers over the weekend. The renewed interest in purchasing new cars can be attributed to a notable drop in certificate of entitlement (COE) premiums during the first bidding exercise of 2024.
Sales staff and managers found themselves busy attending to customers and extending operating hours to accommodate test drives. Gary Quek, senior sales manager for Kah Motor, the distributor of Honda vehicles, stated, “The number of visitors is definitely much better… at least three times more compared with a typical weekend in 2023.”
Quek added that customers are strategically timing their purchases to take advantage of favorable prices, particularly before the Chinese New Year.
At the Toyota showroom on Leng Kee Road, a waitlist formed just to speak to a car salesperson, while the nearby Kia showroom experienced similar levels of activity, with customers enduring a 45-minute wait for a 10-minute test drive.
Ron Lim, head of sales for Tan Chong Motor, the distributor of Nissan vehicles, commented that the high turnout at showrooms was not unexpected. However, what caught car dealers off guard was the substantial decrease in COE premiums during the bidding held on January 4.
The premium for Category A cars, which includes vehicles with engine capacities of 1,600cc and below and horsepower not exceeding 130bhp, closed at $65,010, a 23.5% decline from the previous exercise’s $85,000. This marks the lowest figure since February 2022.
Similarly, the premium for Category B cars, encompassing larger vehicles, dropped by 22.7% from $110,001 to $85,010, falling below the $100,000 mark for the first time since October 2022.
Lim noted, “Most car dealers are witnessing significant improvements in sales. Even prior to the motor show taking place, I think that’s a very strong encouragement… People have been waiting for COE premiums to correct for quite a while.”
The Singapore Motorshow 2024, scheduled from January 11 to 14 at Suntec Singapore, is expected to offer attractive deals and discounts to car buyers. However, some individuals, like Ramasamy Letchumanan, are unwilling to wait longer out of fear that COE premiums may rebound in the next bidding exercise, which is less than two weeks away.
Ramasamy, who visited multiple showrooms, decided to downsize his two-litre Mitsubishi ASX due to the impending COE expiration in 2025. He expressed his interest in the Toyota Yaris Cross because of its competitive price, which falls within his budget.
Another prospective buyer at the Kia showroom, Mr. Goh, is still waiting to see if COE premiums will decrease further with the anticipated increase in COE supply. The Land Transport Authority (LTA) announced in November 2023 that COE supply for cars and commercial vehicles would be raised over the next three months, with an additional injection of 1,614 certificates.
Dealers are fiercely competing to attract potential buyers, offering promotions such as six months of free road tax, $500 off insurance premiums, and free solar film protection for windows.
While the current demand and low COE premiums are promising, there is speculation on whether they will last. Lim stated, “The expectation is definitely for COE premiums to go up in the next tender. But after that, a lot will depend on the number of new quotas being rolled out. Hopefully, this would contain the magnitude of the (COE) rise.”
