Jump to content

COE cycles of boom and bust

COE cycles of boom and bust

ST_Opinion

17,589 views

blog-0135278001435885247.jpg

blogentry-133904-0-06377200-1435885126_thumb.jpgSince its inception in 1990, the vehicle quota system has followed a 10-year peak-and-trough cycle, where the annual supply of certificates of entitlement (COEs) could vary from 20,000 to 100,000.

 

Even if this fluctuation does not impair the effectiveness of the COE system in controlling Singapore's vehicle population, it is highly disruptive. For consumers, the price swings cause discontent, and trigger wasteful outcomes such as cars barely three years old being scrapped.

 

This is because when COE supply is on an upswing, the price of a new car could fall below the residual value of one bought two years earlier.

 

This negative equity has an impact on banks and financial institutions. In the case of defaults, these lenders cannot recoup their loans.

 

The recent curb on car loans mitigates this risk, but not fully.

 

The biggest disruption, however, is to the motor industry. When COEs are bountiful, companies raise their headcount to cope with the surge in sales - only to lay off people when the next dry spell hits.

 

This hire-and-fire pattern makes the sector a highly volatile one. This, in turn, makes skills development that much more challenging, not to mention the ripple effect that disrupted employment has on families and the economy at large. The industry is by no means insignificant. At last count, authorised agents accounted for 4,000 jobs. This could swell to 6,000 in the next two to three years, when COE supply peaks.

 

The figures exclude parallel importers and supporting businesses such as leather upholsterers, accessory shops, and logistics providers like car transporters and warehousing firms.

 

Industry players and advocates have appealed for a more stable and predictable COE supply pattern for some 20 years now. The Government has stood its ground, even when it was presented with the ideal environment a decade ago to make a change. That was when an oversupply brought COE prices down to $3,000 or less.

by Christopher Tan




10 Comments


Recommended Comments

Nothing new that he has not raised in previous articles. Strange he is repeating the same call again, maybe OCS really on the way and this is to prep the grounds.

Link to comment

There is nothing wrong with boom and bust as long as there is a bust when I want to buy a car.

 

Now is all boom and no bust. When can we have a bust?

 

So you can say its now is all boom boom boom.

Link to comment

All these criticism about Chris and that he is writing nothing original.

 

I would like to defend Chris and say

 

Maybe he is a product of our local education and he is trained to regurgitate?

 

:D

Link to comment

Actually I think he is taking about the employment angle here? Regardless, there are boom and bust for many industries, property for example is also very susceptible to severe fluctuations. I guess people in these line will be adept in adjusting to the upswings and downswings

Link to comment

The writer's statement in the last paragraph is incorrect.

 

COE prices were NOT down to $3,000 or less because of an oversupply, BUT rather due to the 2008 financial crisis, considered by many economists to have been the worst financial crisis since the Great Depression of the 1930s.

 

Even if there is an oversupply of COE now, prices will never be close to a 4 digit figure.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Godzilla Minus One: Surprisingly emotional and poignant

    When one thinks of Godzilla movies, one imagines an oversized amphibious dinosaur generating a terrifying heat ray from its mouth and fighting with other oversized monsters. Meh, nothing special, right? Wrong. Here’s why Godzilla Minus One should be an action movie you should definitely catch. In this version, the timeless clash between monster and man is once again set against the tumultuous backdrop of post-war Japan. But, unlike typical action films that dive headfirst into destruction a

    chrissyc

    chrissyc

    Cordless vacuum cleaners: A young adult's best friend?

    Every young adult probably arrives at the same point when they’ve started working for a few years: Household chores start to become more enjoyable. Don’t get me wrong – they don’t have to be one’s favourite activity on earth. But chores start to make sense: An environment that’s put-together is always a welcome haven, whether it’s returning home after a long day out, or simply staying in over the weekend (or when you’re working from home.) As a young adult myself, I've come to appreciate an

    donutdontu

    donutdontu

    Forget the Future - Embrace the Past

    Ah, the future. That shiny, chrome-plated paradise we're all supposed to be chasing. Well, I say bollocks to that. Let's take a cheeky detour down memory lane instead, shall we? Imagine you're lounging in a velvet smoking jacket, sipping brandy from a crystal snifter, surrounded by dusty tomes and antique globes. Sounds rather spiffing, no? That's because old is gold, methinks. While everyone else is frantically scrolling through their social media feeds, we'll be gleefully embracing t

    clarencegi75

    clarencegi75

    5 ways the Polestar 2 Core Edition proves less can be more

    With a less-is-more approach, the Polestar 2 Core Edition offers a more value-for-money entry into the Swedish brand.  What first comes to mind when you think of Sweden? IKEA, and probably ABBA. But there's plenty more that has come out of Sweden besides flat-pack furniture, meatballs and impossibly-catchy pop songs. Founded as a standalone brand just eight years ago and headquartered in Torslanda, Sweden, Polestar is a design-forward electric performance brand that wants to put its Sc

    clarencegi75

    clarencegi75

×
×
  • Create New...