Problems Brewing in the COE Market

[Topspin]

that is what they are doing now mah.. distribute the COE equally base on 1.5% growth rate.

 

the fluaction come from car been scrap to maintain the population of the car.

 

No! There are two components to the quarterly annoucements. One is the planned growth (or contraction), the other is the number of scrapped cars in the last 6 (3?) months. The fluctuations are caused by the later.

[Galantspeedz]

Whether you've paid for it or not - the money's gone.

 

It ain't never gonna come back, it's a sunk cost. The only question to ask - what is the best way forward from here?

 

If there is a way to reduce your depreciation - then it's a good thing to do.

 

Just ask yourself this - is it better to keep a car with a depreciation of $16k per year, or sell it off and move to a depreciation of $11k per year plus a $12k debt? (figures pulled from my arse)

 

Of course it's better to move to the lower depreciation - ASSUMING that you have the financial resources to make that move.

 

i dunno if your english is bad or my english is bad....

 

what i am trying to tell you.. if you can't clear off the loan... you cannot change car.... if you cannot change car... you won't bid for COE..

 

and contrary to what is said in MCF... most people do take a substantial loan for their cars

[Pokyman]

Did the government say they are replacing 1-1 COEs with those cheap coe vehicles in 2015 ? They could just not replace them and implement a negative % growth right?

[Joseph22]

No! There are two components to the quarterly annoucements. One is the planned growth (or contraction), the other is the number of scrapped cars in the last 6 (3?) months. The fluctuations are caused by the later.

yeah. correct and its the right way to go.

 

if not, you will have a more crowded road now.

[Timbuktu]

Your argument is totally flawed.

 

There will not likely be any bumper crop of COEs in 2014-18.

The LTA will recoup back what was 'erroneously' released between 2004-08 - that had caused COE prices then to hit rock bottom ... to <$10K.

 

Mr. LTY had already mentioned in the press that these COE excesses had mostly gone to Cat A buyers back then, but who may not want to let go of their cars now (when they reach 10 years) ... due to rapidly rising COEs. These are their prized possesions you know ... maybe never again an opportunity to own another car in what's left of their life time.

 

Mr. LTY has even hinted on the LTA's next-step strategies:

(1) reduce Cat A quota NOW. This will push up Cat A PQP upward, making it difficult, if not impossible, for existing Cat A car owners to renew their cars as "COE cars" in 2014-2018.

They will thus be 'forced' to deregister and perhaps, switch to public transport.

 

Some die hards may try to resort to used cars.

But used car prices are no good either, cos they would have risen with rising COE prices, starting from 2012-1014 and onward.

 

(2) Recoup back de-registered COEs between 2014-18 and NOT release all of them back to the market (i.e. will NOT be 1-for-1).

This will effectively attain negative growth p.a., which is the LTA's primary objective ... to bring down car population back to last decade's - before that "error" was made.

 

So what bumper crop of COEs are you expecting in 2014-18???

Edited August 10, 2012 by Timbuktu

[Darryn]

i dunno if your english is bad or my english is bad....

 

what i am trying to tell you.. if you can't clear off the loan... you cannot change car.... if you cannot change car... you won't bid for COE..

 

and contrary to what is said in MCF... most people do take a substantial loan for their cars

We're both in agreement on that point.

[Darryn]

Your argument is totally flawed.

 

There will not likely be any bumper crop of COEs in 2014-18.

The LTA will recoup back what was 'erroneously' released between 2004-08 - that had caused COE prices then to hit rock bottom ... to <$10K.

 

Mr. LTY had already mentioned in the press that these COE excesses had mostly gone to Cat A buyers back then, but who may not want to let go of their cars now (when they reach 10 years) ... due to rapidly rising COEs. These are their prized possesions you know ... maybe never again an opportunity to own another car in what's left of their life time.

 

Mr. LTY has even hinted on the LTA's next-step strategies:

(1) reduce Cat A quota NOW. This will push up Cat A PQP upward, making it difficult, if not impossible, for existing Cat A car owners to renew their cars as "COE cars" in 2014-2018.

They will thus be 'forced' to deregister and perhaps, switch to public transport.

 

Some die hards may try to resort to used cars.

But used car prices are no good either, cos they would have risen with rising COE prices, starting from 2012-1014 and onward.

 

(2) Recoup back de-registered COEs between 2014-18 and NOT release all of them back to the market (i.e. will NOT be 1-for-1).

This will effectively attain negative growth p.a., which is the LTA's primary objective ... to bring down car population back to last decade's - before that "error" was made.

 

So what bumper crop of COEs are you expecting in 2014-18???

You say my argument is flawed then proceed to make the same argument?

 

A departure from the 1 for 1 replacement or a negative growth rate IS a change in policy, and one way to deal with the problem of the boom / bust cycle that is going to get worse if something is not done.

 

The point is, I am very sure that something NEEDS to be done. What form it will take though is what remains to be seen.

 

Crystal ball gazing, I reckOn that whatever happens, LTA will be trying to keep COE above 50k.

[Timex1441]

juz want to point out tat the discussion on COE policy cannot be made in a vacuum....let's not forget tat the govt has plans to implement electronic pay-as-you-drive charging system....if tat comes along, it'll change the entire dynamics of the COE market....

[Princey_anne]

Aiyoh thaman already talked abt this lah. he say 30% make no diff.

 

I suggest 50% or greater deposit then sure got diff lah.

There are alot of buyers paying more than 50% when they buy car.

[Cars08]

Why the argument over if COE is a problem or not? All things are based on affordability level and the presence of substitutes (if any). If you can afford, jus buy it, if u cant then jus look for the alternatives. Cannot say last time u can now u cant garment must make it affordable so that u can. Strange tots....

[Kweechang]

Mr. LTY has even hinted on the LTA's next-step strategies:

(1) reduce Cat A quota NOW. This will push up Cat A PQP upward, making it difficult, if not impossible, for existing Cat A car owners to renew their cars as "COE cars" in 2014-2018.

They will thus be 'forced' to deregister and perhaps, switch to public transport.

 

Some die hards may try to resort to used cars.

But used car prices are no good either, cos they would have risen with rising COE prices, starting from 2012-1014 and onward.

 

(2) Recoup back de-registered COEs between 2014-18 and NOT release all of them back to the market (i.e. will NOT be 1-for-1).

This will effectively attain negative growth p.a., which is the LTA's primary objective ... to bring down car population back to last decade's - before that "error" was made.

 

If that is true, we will have high COE until Mid 2018. For example,

 

In order to do not let people renew COE. The only way is to keep PQP high.

 

In order to keep PQP high, then COE need to be HIGH.

 

What type of logic is this????

 

if COE is low (< $20 K) after 2014 and before 2018, then a lot of people will renew COE.

Edited August 10, 2012 by Kweechang

[Liping24cn]

When I say TS argument is flawed, is because I assumed that LTA will tinkle with the quota and clawback when the time comes.

TS is NOT wrong as his assumption is spot on, in theory and logic to what is the current happening, and what will happen if The law and rule is kept as it is today till 2015 thereafter.

 

But we all also know the trial for the GPS IU is ongoing, not sure what is the status currently.

We also know LTY and LTA rules have being changing recently to tame the high COE complaints.

We also know more COE to be released is 0%, as negative growth was already in the pipeline. The current 0.5% growth is a wild card given to prevent the price from going crazy. And the recent taxi Coe game change, is also a wild card temporary respite.

 

What will happen tomorrow no one will know. But one thing for sure, the traffic jams is here to stay and car quota system is also here to stay.

 

Unless someone can come up with a better system, EQUITABLE (not fair hor) to car buyers, that can lower the car ownership costs yet do not increase the traffic jams( can be more cars but, usage wise really spreaded out swee swee until smooth traffic). Then maybe new car buyers will have a chance to own a car and be happier owning it.

 

The funny thing or irony of. The current situation is that new car buyers are complaining too expensive, existing car owners also complain(when their turn to change car) too expensive, those taking taxi also complain fare is high due to COE.

By right an item should only cause anxiety when the person is buying it. It should not bother for those who has already bought a car or those without intention to. It should much less bother those that are taxi users or renting cars, etc. But the fact is everyone is complaining, so it's a real concern for many people.

If I may add, the couriers and delivery services also pass the high COE as higher service fees back to ordinary citizens who has nointention to buy cars.

 

So this High COE issues is really a very big big issues for everyone. Which is why so many people are making so much noise about it.

 

Since young ministers are seeking our views on how best to move forward. This is the best time to shoot all the crazy ideas to the ministers to let them decide before the due date of next 2016 erection. We may just have our wised come true.

Edited August 10, 2012 by Liping24cn

[Civic6228]

1st question, how many cars are fully paid or taken with less than 50% loan when the new car is driven out of the showroom ???

 

TS's argument holds water if the car are fully paid and to sell/scrap the car after 3 years with sufficient $$$ to fully pay for a brand new car ..... make prefect sense..... However the fact remain on how many people can afford to pay fully for their cars and not take any loan ?

 

This is a cycle that happens before ...... it is nothing new .......

[Darryn]

When I say TS argument is flawed, is because I assumed that LTA will tinkle with the quota and clawback when the time comes.

TS is NOT wrong as his assumption is spot on, in theory and logic to what is the current happening, and what will happen if The law and rule is kept as it is today till 2015 thereafter.

 

But we all also know the trial for the GPS IU is ongoing, not sure what is the status currently.

We also know LTY and LTA rules have being changing recently to tame the high COE complaints.

We also know more COE to be released is 0%, as negative growth was already in the pipeline. The current 0.5% growth is a wild card given to prevent the price from going crazy. And the recent taxi Coe game change, is also a wild card temporary respite.

 

What will happen tomorrow no one will know. But one thing for sure, the traffic jams is here to stay and car quota system is also here to stay.

 

Unless someone can come up with a better system, EQUITABLE (not fair hor) to car buyers, that can lower the car ownership costs yet do not increase the traffic jams( can be more cars but, usage wise really spreaded out swee swee until smooth traffic). Then maybe new car buyers will have a chance to own a car and be happier owning it.

 

The funny thing or irony of. The current situation is that new car buyers are complaining too expensive, existing car owners also complain(when their turn to change car) too expensive, those taking taxi also complain fare is high due to COE.

By right an item should only cause anxiety when the person is buying it. It should not bother for those who has already bought a car or those without intention to. It should much less bother those that are taxi users or renting cars, etc. But the fact is everyone is complaining, so it's a real concern for many people.

If I may add, the couriers and delivery services also pass the high COE as higher service fees back to ordinary citizens who has nointention to buy cars.

 

So this High COE issues is really a very big big issues for everyone. Which is why so many people are making so much noise about it.

 

Since young ministers are seeking our views on how best to move forward. This is the best time to shoot all the crazy ideas to the ministers to let them decide before the due date of next 2016 erection. We may just have our wised come true.

 

 

Just a nitpick -

 

Equitable = fair

 

eq

[Darryn]

1st question, how many cars are fully paid or taken with less than 50% loan when the new car is driven out of the showroom ???

 

TS's argument holds water if the car are fully paid and to sell/scrap the car after 3 years with sufficient $$$ to fully pay for a brand new car ..... make prefect sense..... However the fact remain on how many people can afford to pay fully for their cars and not take any loan ?

This is a cycle that happens before ...... it is nothing new .......

 

I would suggest that those who CAN'T change after three years are a minority. And if people are really and truely in that situation, then LTA needs to be taking a closer look at loan structures because if there are significant numbers of people with ongoing negative equity that they CANNOT clear (as oppoesed to don't want to break an investment or similar to clear), it is a pretty big risk to the financial system.

[Ben5266]

Now to next year, total car that must be scrapped is only 15k.

2016-2018 cars to be scrap is 100k each year.

If timbaktu becomes Transport minister and change policy to release only 50% of scrap, it is still 50k per year. 5 x more coe than now.

[Darryn]

Now to next year, total car that must be scrapped is only 15k.

2016-2018 cars to be scrap is 100k each year.

If timbaktu becomes Transport minister and change policy to release only 50% of scrap, it is still 50k per year. 5 x more coe than now.

 

Yes - by all logic, with these sorts of numbers going back into the market will see the COE plunge again - even if most of the deregistrations try to secure another COE

 

I think though, that it is detrimental to the market to have so many peaks and troughs in the COE, and foresee that LTA is going to try an manage a smoother price.

[Timbuktu]

If that is true, we will have high COE until Mid 2018. For example,

 

In order to do not let people renew COE. The only way is to keep PQP high.

 

In order to keep PQP high, then COE need to be HIGH.

 

What type of logic is this????

 

if COE is low (< $20 K) after 2014 and before 2018, then a lot of people will renew COE.

Exactly my point (you may have read wrongly).

 

To prevent mass renewals of COEs between 2014-18:

- COE quotas have to be reduced from now till 2018 and beyond.

- COE prices will then increase to thy kingdom come

- PQP prices will then automatically follow suit.

 

Once Cat A COE price and PQP price rise above $100K, I don't think there are many, if at all, who will want to renew their lau pok 10-yr old cars for another 10 years lease of life.

 

Liddat LTA win oredi!!!

Edited August 10, 2012 by Timbuktu