2015 Sep, 2nd COE Bidding Exercise

[Chucky2007]

 

you changed from your lancer? Congrats

What car you got?

not lancer, colt plus. Changing to Subaru

[tanahteck]

Because we asked for it.

 

I guess COE will increase 2-5k next Wednesday because of new transport minister speech on "car light environment".. So next announcement in October about Coe quota for next 3 months will not impact.

 

So big dealers with hundreds of guaranteed Coe package will put in more aggressive bid, earn few K lesser but get their order out to reduce risk of possibly higher Coe pricing. last Wednesday my dealer bid $62,999 for me, and all settled at $60001.. So I guess it's up next round, 2-5k

I guess COE will increase 2-5k next Wednesday because of new transport minister speech on "car light environment"..

 

I'm glad I don't have to worry about Coe fluctuation in the next 10 years..

[Mustank]

Because we asked for it.

 

 

don't forget part 2:

 

don't wanna hear anymore complaints

 

:XD:

[HarveyPlusac]

I guess for most people, its better to have a fixed COE system, e.g. Cat A 50k Cat B 100K. Really unfair to have Cat B only few k from Cat A. This bidding scheme really make people go crazy, guessing the trend of coe. I am one of them waiting for COE drop further. Its better to have a expensive but fixed COE than a fluctuating one between $2 to $90k. Buying car in SG is like buying stock in the share market.

[Fruit-tart]

I guess for most people, its better to have a fixed COE system, e.g. Cat A 50k Cat B 100K. Really unfair to have Cat B only few k from Cat A. This bidding scheme really make people go crazy, guessing the trend of coe. I am one of them waiting for COE drop further. Its better to have a expensive but fixed COE than a fluctuating one between $2 to $90k. Buying car in SG is like buying stock in the share market.

I find the open bidding system is a fair system, as it allows flexibility .. but the thing is, same as you, I am waiting for the COE prices to drop further, probably drop to $30,000 like that (meaning drop another $20,000 plus or so).. That's what I call it affordability for me. And yes, it's somehow like market shares, there are prices fluctuating as high as $90,000 plus, and prices as low as $2. But still, I will wait. May sounds impossible, but like since it's stock market and prices fluctuate so much, probably have a chance that it is possible..

Edited October 1, 2015 by Fruit-tart

[OngGuoRong]

Hi,

 

For those who still considering vezel x, we have earlier went ahead with our group purchase, 2 rounds already. I am just sharing this info 1 final time for those who still wants, message me for the best quote with full set of accessories. Depend on colours, still have stocks for dec delivery. They also have ready stocks for other cars like harrier,estima if you want a better car.

 

Can message me at 97593012. Thanks.

[Chucky2007]

Tan Chong sales informed that Maybank & OCBC raised car loan interest to 2.78% from 2.28% wef 1 Oct. Not sure have any impact on next week COE

Edited October 1, 2015 by Chucky2007

[Pioneer]

If COE price is fixed, it is no different from the other existing taxes for cars.

 

There is nothing fair or not fair about the price gap between Cat A and Cat B. It proves that the govt was right to predict that an attempt to separate the demands for B&B cars and luxury cars will not create a huge difference in the COE price.

 

No one's really going crazy over guessing the trend. All these discussions are for discussion sake.

 

I guess for most people, its better to have a fixed COE system, e.g. Cat A 50k Cat B 100K. Really unfair to have Cat B only few k from Cat A. This bidding scheme really make people go crazy, guessing the trend of coe. I am one of them waiting for COE drop further. Its better to have a expensive but fixed COE than a fluctuating one between $2 to $90k. Buying car in SG is like buying stock in the share market.

 

[kmttan]

Tan Chong sales informed that Maybank & OCBC raised car loan interest to 2.78% from 2.28% wef 1 Oct. Not sure have any impact on next week COE

An SE from Alphine just sent me this article.

[flashbang]

Tan Chong sales informed that Maybank & OCBC raised car loan interest to 2.78% from 2.28% wef 1 Oct. Not sure have any impact on next week COE

 

Say only la... there will always be some banks who want a slice of the pie and are willing to offer you a lower interest rate than others. See which choices the dealer offer...

[edwin15]

..

 

Haiz. I also think COE prices are keep higher because of this but hard to put the blame all on dealers cos you also need a willingly buyer mah. So I say it takes 2 hands to clap and ultimately still reflects the underlying demand.

 

Fact is that even at current COE prices and the higher total price of a car, there is still enough demand to keep prices supported at this level.

 

The thing that puzzles me is how come dealers are allowed to charge to such high margins and still have so much demand. Note that if you look at sgcarmart, the margin is calculated after ARF of 100-200% and COE not OMV. This essentially gives dealers a margin of over 100% of cost. (I do not think that it is reasonable to factor in consumer taxes as part of a dealer cost as these are just government taxes that dealers collect on behalf of the government.)

 

One way to explain it can be that dealers in Singapore sell a lot less cars than dealers in other regions due to higher total cost after taxes, so they need to take higher margins to cover. However, this again does not seem to be the case as 50% of families in Singapore own a car and we seem to be having road congestion problems.

 

So seemingly, its seems to me that dealers in Singapore are allowed to earn supernormal profits vs dealers in other regions. There must be something in the whole structure of things that allows this to happen. However, I can't figure out what it is.

 

Can anyone with more familiarity with the car industry educate me on why we seemingly have this phenomenon.

[edwin15]

 

That's why I didnt say ALL dealers, I only mentioned: SOME** dealers.. I believe that ADs will have to follow all the rules and regulations which are set by the MAS, like 50%, 60% max loan, up to 5 years, that means that. However, some PIs are bypassing the loan curbs, and bleaching the rules and regulations, by offering 90& loan, 10% downpayment, up to 10 years car loans.. There's alot of grey areas..

 

 

Ok, I will answer you why they charge such high margins still have so much demand. Well, it's becuz they are bypassing the loan curbs. Imagine a 100k car, some dealers say 10% downpayment, meaning pay 10k as downpayment can already, when the MAS rules was set at paying 40k/50k upfront as downpayment. So now when there are dealers offering such "good deals" that u no need pay so much upfront, give u heavy financing and all, yet over a longer period of loan(say 10years) , of cuz you will go to the one which benefit u more. This way, more buyers will go to these dealers (demand increases), and since demand increases, dealers will bid for high COE prices. Keep on bid high COE prices, over and over again, as there are still demand coming in. Good for these dealers, u know why?? Becuz this will drive up their sales + they are able to "earn" and "profit" from the interest rates etc. I guess this is the reason why they bypass the loan curbs, and the reason why COE prices are high. What do u think?

 

 

I really hope there is no grey areas/loopholes anymore, it's really not fair to those who need a car yet cannot afford one. I hope there is more fair and level playing field. Just my few cents worth of opinion.

 

 

I get your point. But even if buyers pay less down payment, it does not make the total cost of the car less. In fact, with the higher interest charges, buyers will pay more in total costs.

 

I find it hard to believe that buyers do not realise this and only look at down payment. So what allows dealers to charge high car prices (total cost) and still have this kind of demand

[Pioneer]

Point 1:

With the availability of taking up to 90% loan to buy a car. If you need to buy a car but still cannot do so even though you can take a 90% loan, does it not sound scary financially?

 

Point 2:

I do not think dealers purposely bid high high. They can bid only as high as people who are willing to pay for it. That's why COE price is partially determined by the market. Also, you have to have many willing buyers to be able to influence COE price. For example, if there are 100 COEs, the dealer with 90 sales will determine the price rather than a dealer with 10 sales.

 

Someone who desperately needs a car can go to the 2nd hand market to buy one, no need to die die buy new car.

 

I may be the few people that believe banning the dealer from bidding COEs may actually cause the price to rise. This is a psychological phenomenal.

 

When you bid for COE, you are bidding blindly, you know the no. of COE available but you do not know many people are buying a car and because you are bidding for yourself, you are more emotionally driven than a stranger bidding on your behalf.

 

Dealers have records, trends and data to predict more accurately. We all know the one with more information can predict the outcome more accurately.

 

 

COE system itself a fair and great system, with alot of flexibility. But SOME dealers are not "playing" it fairly (not sure who are the dealers, but there are many advertisements like: 10% downpayment of car, 80% car loan/financing, up to 10 years car loan). All along I don't get it why COE prices are kept so high, perhaps now I know why. Well, COE prices are still so high is because SOME dealers (e.g PIs) are bypassing loan curbs (as seen from several articles). The rules are set at 50% or 60% loan max (based on the MAS restrictions), but there are some PIs giving 80%, 90% loan, and up to 10years of loan. So SOME of these dealers purposely bid COE high high, as this will allow more people to take loan from them as the overall prices are high, so no choice but to take loan, and this way, these dealers can earn money by seling their car, and at the same time, earn interest from the loans people took up.

Advantages for these PIs:

- by bypassing loan curbs, do "magic" --> increase their sales.

- by charging at higher interest rates, and over the period of 10years --> dealers get the benefits from the interest rates.

Haiz, no wonder COE prices never seems to come down. No wonder those who NEED a car but yet cannot afford. Is there any way to have a more fair and level playing field??

Articles link 1: http://www.stcars.sg...an-curbs-146431

Article link 2: http://blog.moneysma...-dont-consider/

 

 

[Bioinformatics]

Tan Chong sales informed that Maybank & OCBC raised car loan interest to 2.78% from 2.28% wef 1 Oct. Not sure have any impact on next week COE

 

wow... jin heng, I secure at 1.88% on Tuesday.

[Rayleigh]

 

wow... jin heng, I secure at 1.88% on Tuesday.

You book a Hyundai?

[Zeally]

Point 1:

With the availability of taking up to 90% loan to buy a car. If you need to buy a car but still cannot do so even though you can take a 90% loan, does it not sound scary financially?

 

Point 2:

I do not think dealers purposely bid high high. They can bid only as high as people who are willing to pay for it. That's why COE price is partially determined by the market. Also, you have to have many willing buyers to be able to influence COE price. For example, if there are 100 COEs, the dealer with 90 sales will determine the price rather than a dealer with 10 sales.

 

Someone who desperately needs a car can go to the 2nd hand market to buy one, no need to die die buy new car.

 

I may be the few people that believe banning the dealer from bidding COEs may actually cause the price to rise. This is a psychological phenomenal.

 

When you bid for COE, you are bidding blindly, you know the no. of COE available but you do not know many people are buying a car and because you are bidding for yourself, you are more emotionally driven than a stranger bidding on your behalf.

 

Dealers have records, trends and data to predict more accurately. We all know the one with more information can predict the outcome more accurately.

 

 

I am not sure how the coe price would vary if dealers are not bidding for the buyers. But i disagree with the point that we are bidding blindly. When individuals bid, rhe results are live. If our bid are still in the race, we know that our price is above the minimum and when it isn't, we can revise our bid to be higher... till a point when it is too expensive, we will stop and give up. That means i am fixing my own price for my car. E.g. 75k for coe and car. Dealer sells car dor 40k without COE. I know my budget for COE is 35k, i just bid till the max of 35k. Different ppl set different budget and this could be like 50k car 40k coe or 20k car 20k coe etc. So depending on how much each person decides to put in for coe, those that puts more gets it. Those that cannot get, try again next time. This is will be a fair market. Those that are willing to pay gets the goods. No one is being forced to pay more.

 

If dealer bid, the system is like this: 4 bid guaranteed coe rebate at 52k, total price 100k for example. If we look at the car omv and arf, we sell that coe+arf+omv is less than 100k. The difference is the dealers' premium. Let's say its 10% of price so its 10k. Now do calculations. If coe is secured with 52k, the dealers earn 10k. If coe is secured with <52k they earn 10k as well,the savings is passed on to the consumer. But will 52k really secure the coe at the moment? No... unlikely, so while they say rebate is 52k, they will bid 56k. More likely that coe us secured and they earn 6k from the sale. They earn less but still earn. Can they bid more? Yes. They can bid up to 62k. In that case they earn $0. Of course they won't, but you get my point that the dealers can bid coe price starting from coe rebate to coe rebate + premium, all these prices will ensure profit on their end as long as sales go through. Do they have any incentive to bid lower than 52k? Unlikely! Less chance to secure coe so may end up losing customer, earns the same amount as bidding 52k in the unlikely scenario that coe is secured. So when we look at coe rebate level we know that those prices will be pump in. So COE price is determined by the lowest of these so call rebates. Before the bid start any logical bidder will know that this amount will be the minimum to throw in. Dealers control prices, and because partly customers entrust dealers with their money to bid.

 

So to summarise, individual bid for personal interest using own money, price reflects desperateness and financial ability to pay for it, pay more heart pain for the majority. Dealer bid for their own interest using other people's money, pay more doesn't matter as long as deal is secured and car is sold, dealer gets to profit.

[Pioneer]

A rationale person will stop bid firmly at the max value but what happens when you stick to your target but fail to get COE after a few rounds?

 

At the heat of the moment, a private bidder may decided to just top up 2k of his max bid of 50k, then 100 more, 200 more, 300 more because he is now invested.

 

A simple example will be people who continue a relationship because they have already spent 10 years in it. A waste to let go. The key thing is you are bidding for yourself, you are invested and you may turn desperate if you are not disciplined enough.

 

I am not saying it most definitely will happen but it will happen. For dealers, at least you know the COE rebate price openly and can predict their bidding price. Without it, who knows?

 

 

And trust me on this. If dealers are banned from bidding, a group of entrepreneur will start to offer bidding servicing for car buyers. They will offer you additional service like monitoring of COE pricing, analysis of demand and supply and then maybe 6-bid guarantee packages, help you transact with car dealers to provide a fuss free car buying experience for a fee.

 

Haha.. then these companies will offer COE + car package for people who are lazy to bid their own COE. In the end we kill one monster, create another monster.

 

 

I am not sure how the coe price would vary if dealers are not bidding for the buyers. But i disagree with the point that we are bidding blindly. When individuals bid, rhe results are live. If our bid are still in the race, we know that our price is above the minimum and when it isn't, we can revise our bid to be higher... till a point when it is too expensive, we will stop and give up. That means i am fixing my own price for my car. E.g. 75k for coe and car. Dealer sells car dor 40k without COE. I know my budget for COE is 35k, i just bid till the max of 35k. Different ppl set different budget and this could be like 50k car 40k coe or 20k car 20k coe etc. So depending on how much each person decides to put in for coe, those that puts more gets it. Those that cannot get, try again next time. This is will be a fair market. Those that are willing to pay gets the goods. No one is being forced to pay more.

If dealer bid, the system is like this: 4 bid guaranteed coe rebate at 52k, total price 100k for example. If we look at the car omv and arf, we sell that coe+arf+omv is less than 100k. The difference is the dealers' premium. Let's say its 10% of price so its 10k. Now do calculations. If coe is secured with 52k, the dealers earn 10k. If coe is secured with <52k they earn 10k as well,the savings is passed on to the consumer. But will 52k really secure the coe at the moment? No... unlikely, so while they say rebate is 52k, they will bid 56k. More likely that coe us secured and they earn 6k from the sale. They earn less but still earn. Can they bid more? Yes. They can bid up to 62k. In that case they earn $0. Of course they won't, but you get my point that the dealers can bid coe price starting from coe rebate to coe rebate + premium, all these prices will ensure profit on their end as long as sales go through. Do they have any incentive to bid lower than 52k? Unlikely! Less chance to secure coe so may end up losing customer, earns the same amount as bidding 52k in the unlikely scenario that coe is secured. So when we look at coe rebate level we know that those prices will be pump in. So COE price is determined by the lowest of these so call rebates. Before the bid start any logical bidder will know that this amount will be the minimum to throw in. Dealers control prices, and because partly customers entrust dealers with their money to bid.

So to summarise, individual bid for personal interest using own money, price reflects desperateness and financial ability to pay for it, pay more heart pain for the majority. Dealer bid for their own interest using other people's money, pay more doesn't matter as long as deal is secured and car is sold, dealer gets to profit.

 

[Limwsv]

 

Haiz. I also think COE prices are keep higher because of this but hard to put the blame all on dealers cos you also need a willingly buyer mah. So I say it takes 2 hands to clap and ultimately still reflects the underlying demand.

 

Fact is that even at current COE prices and the higher total price of a car, there is still enough demand to keep prices supported at this level.

 

The thing that puzzles me is how come dealers are allowed to charge to such high margins and still have so much demand. Note that if you look at sgcarmart, the margin is calculated after ARF of 100-200% and COE not OMV. This essentially gives dealers a margin of over 100% of cost. (I do not think that it is reasonable to factor in consumer taxes as part of a dealer cost as these are just government taxes that dealers collect on behalf of the government.)

 

One way to explain it can be that dealers in Singapore sell a lot less cars than dealers in other regions due to higher total cost after taxes, so they need to take higher margins to cover. However, this again does not seem to be the case as 50% of families in Singapore own a car and we seem to be having road congestion problems.

 

So seemingly, its seems to me that dealers in Singapore are allowed to earn supernormal profits vs dealers in other regions. There must be something in the whole structure of things that allows this to happen. However, I can't figure out what it is.

 

Can anyone with more familiarity with the car industry educate me on why we seemingly have this phenomenon.

 

Definition of Supernormal Profits.

http://www.economicshelp.org/blog/3181/economics/supernormal-profits/

 

Cause of supernormal profit due to market where new suppliers cannot enter. No reasons for ADs and PIs to reduce their own margins to grab a limit slice of the market and introduce a price war.