COE Feb 2012 First Bidding

[Roh96]

Missed the excitment this afternoon. Amazing result. I am surprise ppl are still talking about $2 COE. I have already erase this hope liao.

[Darryn]

Actually I dun really agree. New cars also include a dealer profit of at least 20%.

To give u an example, I recently sold my car for 85k, I bot it at 92k in 2009. If COE had remained at the same level of 15k, my car would probably be worth only about 65k, considering a yearly depreciation of about 10k. So while COE has risen by 50k, I only benefitted by 20k. There is already some discounting mechanism, so used cars may still be worth it, esp if u intend to drive till year 10

 

OK...I ask you something then....

 

If you look at it this way.

 

Case 1 - in 2006

OMV = $20k

ARF = $20k

COE = $10k

Dealer Profit = $20k

Selling price = $70k

 

Case 2 in 2012

OMV = $20k

ARF = $20k

COE = $70k

Dealer Profit = $20k

Selling Price = $130k

 

In 2012, if I scrap the 2006 car, I will get back about $12k + value of body, so say (for round figures) $20k correct?

 

But somebody will say - hmmmm...I can pay $7k per year for a new car, but I can also buy over the remainder of Darryn's COE for $5k per year, so perhaps I shouldYou are offer him $30k for his car -

 

In other words, I am getting a premium on the underlying value of the car because it is relatively more expensive to buy a brand new car.

 

But what happens if one year later, the COE drops back to $5k? Then the used car is only worth the scrap value - so in that case what is the depreciation going to have been like. You $10 k permium has all disappeared. It may well be less depreciation than a new car still, but it feels to me like your arse is out blowing in the wind.

 

 

 

[13177]

During the 90s, COE price already around the current price level and sometime even more ex den the current price level, many sporean that time also buy toyota, honda at 100k range with no 10 yrs loan, low interest rate, and low down payment. I dun see why COE at this price level will stop ppl from buying. It juz restore back to the 90s pricing that already sporean can well afford it that time.

In the 90s when the COE was super high and toyota and honda priced at 100K or more, people still buy because back then nobody been through the times when COE was around $10K or even dropped below $1K. That's why people in the 90s nothing to compare and thought that was what COE price suppose to be.

 

But when now the COE went back during the 90s, but how come people cannot accept toyota and honda priced at 100K? As people now tend to compare COE price between 2005-2009!

[Princey_anne]

Well, you really have to make the decision yourself. everyone is basically guessing. My gut feel is that prices will hover around the 50k/70k mark until aug, which will tend go higher.

 

So if you a car in the next 1-2 yrs, think about buying now. After that, who knows.

 

Yes, it all depends on you. I sold my 5.5 years old car last dec and change from cat b to cat a. But I do miss my old car.

[Princey_anne]

Well, you really have to make the decision yourself. everyone is basically guessing. My gut feel is that prices will hover around the 50k/70k mark until aug, which will tend go higher.

 

So if you a car in the next 1-2 yrs, think about buying now. After that, who knows.

 

Yes, it all depends on you. I sold my 5.5 years old car last dec and change from cat b to cat a. But I do miss my old car.

[13177]

in my office, there are many earning $3k to $4k but driving a car....

 

It is not for me to preach whether you deserve to have a car or not... or whether you can afford one...

 

But i seen the cycle many times.....

 

low interest rate, easy availability of easy credit, maxing on your credit card..... high property prices....

 

History always repeat itself.... always....

Earning $3K to $4K and driving car? Sometimes also must depends what car they drive, how much loan they take and how many expenses the person has besides his car? I think must see many factors then can determine whether the person driving car is affecting his daily life or not?!

[Mecontle]

heeng i struck when the coe was hot at 30k

[Ooosh]

And yes -

 

I am bitter, my wife and I are both earning respectible incomes, we live in a HDB with a low mortgage payment, and I can't even afford to replace my 6 year old econobox car with something a little bigger now that the family are having trouble fitting into it.

 

It's a big deal to me - being "restricted" to public transport would have a very big impact on the quality of our lives.

 

But paying over $ 7,000 a year ($20+ a day) for the privilege of owning a car, before even considering things like parking ($90 a month) road tax (another $1,200 a year) and insurance sure rankles.

 

And frankly, even could I afford it comfortably, paying this sort of money just doesn't make any sort of sense. A new Previa right now costs $190k. Paymentss (10 years, no deposit) would be $1,800 per month. When I was a student I put myself through university, inclusive of fees, food and rent and about $900 per month.

 

For $70,000 I could quite easily have a two year vacation in New Zealand - or go and get my masters.

 

Investing it now, I could put my oldest daughter through medical school, or both children through a "standard" degree (like law or engineering), inclusive of living costs.

 

A car is luxury no matter if it is a QQ or Econbox. Do you know there are lot of family have to wait under hot sun every weekend just to flag a cab to go shopping?

 

Like what han said, in life you make choices and you dont look back.

 

[JJ_JJ]

agree.. but seems like every1 here are used to the high pricing alrdy

 

 

Its a propagation.

People who are rich Hack care.

Then people who need to hide cash, buy it.

Then people who got easy money, buy it.

Then people who see the opportunity of trading off their rides bought at much lower coe, traded it.

Then the rest of the people who lan lan buy it.

 

This is a captive market lah. Luckily I bought a used impreza 1.6M 2 years back. Economical buy. Dare not anyhow switch my ride.

Guess gonna to lun and stick to it for a few more years liao.

[13177]

heeng i struck when the coe was hot at 30k

I remember when the COE was 30K and my friend bought a car, i thought my friend went crazy! COE 30K so expensive! Now then i know my friend so lucky, and barely less than 2 years and the COE became 52K!

[Chongster]

we live in a world of hyperinflation. where in the world do prices for cars and homes (probably the two biggest purchases for a normal family) move that much that quickly!?

[Toothiewabbit]

the parking still haven't shoot up yet ok...

Don't hold our breath. It's coming soon.

[Mecontle]

I remember when the COE was 30K and my friend bought a car, i thought my friend went crazy! COE 30K so expensive! Now then i know my friend so lucky, and barely less than 2 years and the COE became 52K!

the next cycle is 5 yr only

[Mllcg]

cheapest way is to keep your cars and renew COE at 10 year mark all the time.

 

a new car then would cost at least 100k+++.

 

paying PQP of around 70k(cat B)

 

or 50k(cat A)

 

can let u drive for 10 years.

 

compared to 100k for 10 years.(assuming after scrap value deducted)

[Chongster]

My argument is based on the fact that used cars are currently selling above their underlying value.

 

The value of a car is based on 4 components

a) body value

b) ARF

c) COE

d) "Demand premium" (how much people want it.

 

Items A and B are basically fixed.

 

For a brand new car, item A depreciates faster than a used car - this is correct, and this is why a new car will depreciate faster.

 

Item B - fixed and controlled by gubermint, depreciates in a straight line.

 

Item C - fixed at the time of purchase, also depreciates in a straight line

 

What is not fixed is item D - this flucuates. The amount that people are willing to pay changes with the relative prices of a new car. When the COE goes up rapidly to three or four times the COE of used cars, the "demand premium" that people are willing to pay moves in tandem. This is because it is "cheaper" to pay a COE depreciation + demand premium of (for example) $4k per year, than it is to stomach a COE depreciation of $7k.

 

This is fine - so long as the COE stays high, then a used car is a better deal. But you are taking a punt.

 

If the COE drops back to, for example, $35k the "demand premium" you paid is going to evaporate really quickly. And you will be left holding the baby.

 

It's kind of like paying a premium to have the first of something, or paying a "limited edition" fee, and then finding out one month later you don't have a limited edition - the value will disappear.

 

 

maybe all this is true in terms of valuing a car at a particular point in time, but like all paper value, it is irrelevant if you are not selling and consuming the product. In which case, the only thing that matters is how much you paid.

 

also if COE were to plunge, yeah, old car will suffer because no demand and if you need to sell, good luck. But the car that you bought new and is now old, while still have high paper value, will also see it's selling price drop a lot. There is also the loss of that new car smell premium which you have consumed the moment you drive the car out of the AD.

 

anyway, for me, i will stick to nice used cars, drive them for 5 years and sell near paper, actual depreciation less than 15k/yr. i can live with that.

 

 

[ins1dious]

Actually I dun really agree. New cars also include a dealer profit of at least 20%.

To give u an example, I recently sold my car for 85k, I bot it at 92k in 2009. If COE had remained at the same level of 15k, my car would probably be worth only about 65k, considering a yearly depreciation of about 10k. So while COE has risen by 50k, I only benefitted by 20k. There is already some discounting mechanism, so used cars may still be worth it, esp if u intend to drive till year 10

 

This is true to an extent. However, the new car premium is not only the dealer margin but the extra years of warranty you're getting with a new car. I benefited about 30k after depreciation for my 2yr old Mazda6 even though COE difference was only 50k. Bought for 90k and sold for 100k. And this is after doing 45k kms mind you. I won't account for depreciation to cover mechanical wear and tear. That is an unknown risk all 2nd hand buyers have to face.

[Mllcg]

cheapest way is to keep your cars and renew COE at 10 year mark all the time.

 

a new car then would cost at least 100k+++.

 

paying PQP of around 70k(cat B)

 

or 50k(cat A)

 

can let u drive for 10 years.

 

compared to 100k for 10 years.(assuming after scrap value deducted)

 

anyone agree?

[Toothiewabbit]

Any COE predictions comes August when the next cut takes effect?

Edited February 8, 2012 by Toothiewabbit