2015 May, 2nd COE Bidding Exercise

[Tohto]

Cat A will not drop as even Hyundai is giving rebate at $69k for Elantra...

[Rskc]

During the old good times, it was projected scrap, thus supply is ahead of demand.

 

Now coe is recycled back to system, meaning supply will always lag behind demand. To have supply catch up with demand, there has to be someone scrapping and not replacing immediately. Is my logic correct?

 

So far among my colleagues, relatives and friends, only 1 gave up the car. I can't live without car too as I need it to ferry kid to school, so does my colleague.

 

Just my 2 cents and some food for thought.

[Porche]

Bo lui hold on lor, intend to hold on till 2018 since my car only due in 2019. The most get another used car, but this round maybe continental.

[Simpleonly]

very "chim"..... I never take econ before.... catch no ball....

but thanks very much for sharing your info and trying to teach u o this :)

Time for me to appear again.

 

Econ 101 : Why is it so difficult to grasp that the demand is always there, the curve will extend all the way until the price of COE is zero.

 

 

Of course the demand will always match the supply per auction unless of a black swan event which prevents bidders from entering the market.

 

The key thing is that each preceding price group must be satiated first before the price can fall.

So, those who can afford 65K COE must all buy first before those who can afford 55K COE. Then COE will fall to 55K so that group can start buying.

 

Since there no statistics release on household wealth, as oppose to income which data is available. We can only use income as a gauge of wealth and willingness to pay.

 

This chart shows that trend and the purchasing power of each income band.

 

So, you know your household income, my chart will tell you what are your chances of buying a new car.

 

And, the next chart shows the age group and income level. So, please account for new young buyers but also retiring old folks.

 

And please, if you want, I can dig out the statistics of the non-resident growth and the proportion of profession with high pay as oppose to those on S-pass and such, who will be unlikely to desire to spent their hard-earn money in Singapore. You will be surprised that it is not as high as you think.

 

Some more, a large number of those in the higher bands typically get company cars or lease cars, so they don't appear in our market except through 3rd parties car rental companies and company cars.

 

 

 

 

No way COE is dropping.

 

3 of my office friends already top up another $3k and change their COE bidding to the guarantee package.

 

The agent told them alot of people booking during CNY period already top up/changed to guarantee package, those who refuse to lost out the July rebate.

3k top up is Nissan QQ?

[Tigershark1976]

 

No way COE is dropping.

 

3 of my office friends already top up another $3k and change their COE bidding to the guarantee package.

 

The agent told them alot of people booking during CNY period already top up/changed to guarantee package, those who refuse to lost out the July rebate.

 

Cannot be, this is insider news. Anal Yee Pang Sai Told me, cannot be wrong! LOL

[Kimchicarlover]

During the old good times, it was projected scrap, thus supply is ahead of demand.

 

Now coe is recycled back to system, meaning supply will always lag behind demand. To have supply catch up with demand, there has to be someone scrapping and not replacing immediately. Is my logic correct?

 

So far among my colleagues, relatives and friends, only 1 gave up the car. I can't live without car too as I need it to ferry kid to school, so does my colleague.

 

Just my 2 cents and some food for thought.

Supply is fixed. Demand is die die must buy. Only Singaporeans stupid enough to pay such high prices for cars. The whole country is mad.

[kmttan]

Supply is fixed. Demand is die die must buy. Only Singaporeans stupid enough to pay such high prices for cars. The whole country is mad.

 

Let's put this this way. Other countries have no COE and a Camry may cost only USD20K with road tax USD200. However, their income tax is higher. Here in Singapore, we pay lower income tax, because every other households pay $7K tax annually for their car. This is a lifestyle tax, much like the GST.

[F355]

Given that Infiniti advertise big big in Straits Times that COE rebate is 70k ( Cat B), and dealers typically has a margin of 10k to play about , and that the last Cat B price is 77k , May 2nd bid will be somewhere around the first bid.

 

I will not waste my time monitoring the results .

[Limwsv]

 

For those belong to the 55K COE group, most likely their target is set at B&B cars that cost around $100K. This mean that they already had at least $40K (40% downpayment) cash set aside for their purchase. For 65K COE, what they need is just additional $4K (40% downpayment) which is about $44K. If a person is able to save up to $40K, most likely he will be able to save an additional of $4K within the next few months.

 

So what I meant is that as of now, 55K is the break point for them. But in the near future, their breakpoint will be shift to $65K. This is more so for those whose ride will be expiring soon. They will try their best to shift up their brake point as men will be men. Once men had a taste of owning a car, they will want to continue owning a car.

 

Hmm.. Econ 101 teaches us that wants (or needs if you prefer it that way) is unlimited. If cars are cheap, you would probably buy a sport car, a SUV, a MPV and a Sedan and keep them at home to choose which you like to drive that trip.

 

Imagine if there's no market and the only way you can buy/sell is directly and you cannot get different quotations. So seller quote you 160K for the car, you will have no way to evaluate is that a fair price. The existence of a market allow you to see how other buyers in the market price the goods.

 

Price is a informational signal to make purchasing decisions. It determine how cars are to be allocated base on your utility (econ terms, not english term). As you have correctly pointed out, we only see the demand/supply curve as a snapshot in time and the actual demand curve varies over time as buyers circumstances changes. However, the law of large numbers guarantees that the variations within the buyer market even out to a norm. (So the dirty secret is that the demand curve is not actually a line, but lots of points cluster around the imaginary line that is always moving up and down as they react to market information).

 

As I have mentioned in previous threads, a demand curve can be found by testing the market by asking all the buyers at all the price points their willingness to buy. Where they stop, that's their point in the demand curve. Going back to the beginning, until the previous band of buyers with higher price point in the demand curve have sated their wants/needs, the next band will not be able to enter.

 

All the cases you have cited are the buyers in the higher band of the demand curve. So until they have clear out of the market, the price won't drop. So the million dollar question is have that pool of demand being exhausted?

 

We won't have a direct answer, however we can observe the behaviour of the ADs, which holds pieces of the market in the form of their order books. Look at the market makers, ie those with a large market share and you can probably guess whether the demand has been exhausted. My feel is that we are close to that tipping point. People like you would have higher price points have already done their purchases and unlikely to return to the market within the next 1 or 2 years.

[Lincoln]

The number of cars registering lag the number of cars deregistering by a huge margin, to the tune of 35-40%. Some call this the demand lag.

 

As a result, the car population has decreased since Jan 2014, i.e. from 624k cars to only 609k cars. So, 15k ex-cars owners are now without cars. This is the cumulative effect of the demand lag since Jan 2014. I.e. Since Jan 2014, while increasing, the car quota has never satisfied the demand lag.

 

This demand lag and its cumulative effect on reducing car population has prevented COE price from going lower.

 

However, the demand lag will be diminishing (in percentages basis) when the quota base is high by itself. The current growth rate of 0.25% in the quota formula till Jan 2018 is unlikely to help the car population to actually grow. So car population is likely to reduce all the way to Jan 2018.

 

Now, COE price is for sure trending low (due to unusually high quota) but that 0.25% growth rate seems to be designed to ensure that price is fairly consistent by reigning in car population and ensuring a demand lag every time. LTA is likely to increase the growth rate beyond Jan 2018 and this is to ensure that price dun escalate when drought years start in 2018. I think LTA might get it right this time. As COE price becomes consistent, COE quota supply becomes consistent as the scrapping become less disruptive.

Edited May 18, 2015 by Lincoln

[Sweeney]

No wonder you are trying to talk down the market

 

😂

If only I have that kind of power, bro...

[Sweeney]

 

All the cases you have cited are the buyers in the higher band of the demand curve. So until they have clear out of the market, the price won't drop. So the million dollar question is have that pool of demand being exhausted?

 

We won't have a direct answer, however we can observe the behaviour of the ADs, which holds pieces of the market in the form of their order books. Look at the market makers, ie those with a large market share and you can probably guess whether the demand has been exhausted. My feel is that we are close to that tipping point. People like you would have higher price points have already done their purchases and unlikely to return to the market within the next 1 or 2 years.

 

Good analysis and insights. Let's hope that pool of higher band buyers will be satiated by June/ July and that with the CEVS-dust settled, a gradual down trend can be observed in COE pricing. By this time, the psychology of buyers in a downtrend market may be to hold off in the 'hope' (gamble?) of lower prices. This is the kind of 'rationality' that I am hoping (praying?) for alluded to in my post.

 

As all bros here correctly pointed out, these posts here are mainly opinions and speculations on our part and each of us have to do our own calculations to arrive at our own conclusions.

[kmttan]

$7k annually is only COE ? There's also ARF (100-180%) and Excise Duty (20%).

 

Though cars in US are much cheaper even comparing with most other countries that has no COE. Their income taxes are certainly higher, easily 30-40%, haven't include state income tax yet.

 

 

 

You are right. A camry that cost S$30K in US vs S$150K in Singapore. The difference of S$120K is essentially a tax of $12K/year. Also, the petrol here also cost twice of that in US. Road tax in US is also around US$150. Hence, the tax we are paying for each car is around S$15K/year. For someone who earns $100K/year, this is 15% tax, excluding the income tax. So, since we pay lower income tax, we can afford to pay higher vehicle tax.

[BanCoe]

 

You are right. A camry that cost S$30K in US vs S$150K in Singapore. The difference of S$120K is essentially a tax of $12K/year. Also, the petrol here also cost twice of that in US. Road tax in US is also around US$150. Hence, the tax we are paying for each car is around S$15K/year. For someone who earns $100K/year, this is 15% tax, excluding the income tax. So, since we pay lower income tax, we can afford to pay higher vehicle tax.

Yes but in US the distances between places is quite so far and even where there is public transport its definetely more expensive than ours though I know in NY the trains run 24 hours. Yes things (costs) in Singapore are really getting out of hand especially with our higher land rentals and of late high coe's for goods vehicles which will add up to costs again and man on the street pays for it finally again and it leads to a monkey see monkey do attitute where everyone jacks up its prices; Just 2-3 years back a bowl of sweet tofu bean curd at Hawker centre @ Bedok was 50-60 cents ; now 80 cents ; over how many % already gone up- Dept of Shitistics also dont know how to calculate and says inflation is like always below 3-4% ; Even the packeted mee used to have 2 options $1.50 and $2.00 now its $2.00 and $2.50 and also the packet/contents become "lite weight", Even ask extra chilli sauce - they will boldly say - aiyah! must pay extra

 

[Axela72]

Bo lui hold on lor, intend to hold on till 2018 since my car only due in 2019. The most get another used car, but this round maybe continental.

 

Wow, due on 2019 also think of changing car. If many same situation like you but got $$$, no wonder why COE cant come down.

 

Pls let those ppls COE that is going to expire soon to take their bite 1st.

[Porche]

 

Wow, due on 2019 also think of changing car. If many same situation like you but got $$$, no wonder why COE cant come down.

 

Pls let those ppls COE that is going to expire soon to take their bite 1st.

j

 

Bo pian leh, used to change cars every few years. Just bei kan wan put so much money on a car nia. Bei change lah. Aiyo SG got so many rich ppl, MCF have the most concentrated rich ppl, these are the ppl affect the COE not small fly like me

[BanCoe]

j

 

Bo pian leh, used to change cars every few years. Just bei kan wan put so much money on a car nia. Bei change lah. Aiyo SG got so many rich ppl, MCF have the most concentrated rich ppl, these are the ppl affect the COE not small fly like me

MCF may have the highest nos of rich people (though I doubt so the Uber rich would even bother to read all this stuff in MCF) The Uber rich will just be trolling on IRAS stuff/ accounting stuff- where they make better and well informed tax planning by the millions; What is the 50K or 80K going to matter to the guy whom makes millions (by the way MIW are also in this cat. but they must show they drive regular 2-2.5L cars cannot anyhow flaunt yours and mine and fellow peasants $)

[Passat57]

MCF may have the highest nos of rich people (though I doubt so the Uber rich would even bother to read all this stuff in MCF) The Uber rich will just be trolling on IRAS stuff/ accounting stuff- where they make better and well informed tax planning by the millions; What is the 50K or 80K going to matter to the guy whom makes millions (by the way MIW are also in this cat. but they must show they drive regular 2-2.5L cars cannot anyhow flaunt yours and mine and fellow peasants $)

I thought the super rich will have a team of "Financial Consultants" to do that for them?