COE Bidding – June 2022

[SLing]

The word is "FIRM DEMAND" & not "hard up" to have a car

https://www.todayonline.com/singapore/coe-prices-large-cars-100000-demand-keep-prices-high-1920356

Edited June 9, 2022 by SLing

[Wt_know]

firm demand = die die must buy ...

[Confusedboi]

Madam president I mean Milo ambassador S class door cannot unlock https://forums.hardwarezone.com.sg/threads/gvgt-halimah-car-door-cannot-open.6762237/ 

[Watwheels]

LoL... with the poor global economy outlook, war, fast rising cost of living, the R word is a threat to every country every nation. On May Day our PM also warned us about the uncertain future ahead. But in Singapore COE can hit $100K, HDB(Yishun) can hit slightly over $1mil. Ppl here seems very confident. I dunno what to think. It is very bizzare, confusing and worrying. Lets hope nothing bad will come. 

[Ginyu]

Even with poor Global economy outlook no impact la, as Many still can afford even without a job, COE up up away 😂 

Edited June 9, 2022 by Ginyu

[Mkl22]

6 hours ago, Atonchia said:

The number of newly arrived rich doesn't really matter a lot. 

A quick overview will be using current statistics. 

Total households in SG is 1.37m.

35% of households own cars.

1% are the UHNW households = 13700 households. Let's say each household has 3 cars, that will be 41k luxury cars. 

Total vehicle population is 1m, of which 600k are private vehicles, 

So the ultra rich cars probably account for 7% of cars on the road. 

But these cars unlikely to be on the road at the same time, hence not likely contribute to vehicle traffic.

COE is affected by bidding and push up by this group of 13700 households when they change cars. 

So COE is not helping to reduce vehicle traffic on the road, It's design to increase the price of cars. So indirectly reduce car ownerships and car population. 

ERP idea is to redirect peak hours traffic to other timing at high density locations. 

So the more cars this UHNW group hold, the less goes back into the pool.

There will still be a strong demand from the remaining of top 10% households in SG. 

Let's assume the top 2-10% households (123,300) has 150k cars.

With the 41k, total is 191k cars.

These numbers will likely be in the open cat or cat B.

The larger the wealth level increase, the higher the demand for luxury and super luxury cars. 

The top 11-20% households (137,000) will likely be looking at cat-A cars and a portion looking at cat B cars. Likely 1 car per household in this group = 137,000 cars.

Then 21-35% is 205,500 likely Cat-A cars.

So estimates:

Top 10% owns 191k cars

Top 11-20% owns 137k cars

Top 21-35% owns 205k cars

77k PHV, 

Total is 610k cars 

It is back to the same scenario years ago when taxi companies were expanding and renewing their fleet. 
it’s PHVs turn once again after their foray in 2016-2017. 

[Atonchia]

27 minutes ago, Mkl22 said:

It is back to the same scenario years ago when taxi companies were expanding and renewing their fleet. 
it’s PHVs turn once again after their foray in 2016-2017. 

That was when they took the taxi out of COE bidding.

[SLing]

this chart shows COE prices since 2002.  https://coe.sgcharts.com

would it be fair to say that the saw-tooth pattern is determined by how many COE's are up for bidding?

since the drops are not sudden,  are the drops really determined by economic conditions e.g. recession?  The drop from 2004 to 2019 and from 2013 to 2020 seem to be gradual. 

anybody out there who knows the history of the movements?

Edited June 9, 2022 by SLing

[Atonchia]

13 minutes ago, SLing said:

this chart shows COE prices since 2002.  https://coe.sgcharts.com

would it be fair to say that the saw-tooth pattern is determined by how many COE's are up for bidding?

since the drops are not sudden,  are the drops really determined by economic conditions e.g. recession?  The drop from 2004 to 2019 and from 2013 to 2020 seem to be gradual. 

anybody out there who knows the history of the movements?

Supply and demand

[Confusedboi]

35 minutes ago, SLing said:

this chart shows COE prices since 2002.  https://coe.sgcharts.com

would it be fair to say that the saw-tooth pattern is determined by how many COE's are up for bidding?

since the drops are not sudden,  are the drops really determined by economic conditions e.g. recession?  The drop from 2004 to 2019 and from 2013 to 2020 seem to be gradual. 

anybody out there who knows the history of the movements?

Another factor is how much can you loan. I recall around mid 2000’s -2010era can loan up to 100%  over 10 year loan period and pay zero downpayment. Gahmen later on change to minimum 30% downpayment for cat A , max 7 year Loan period  and  minimum 40% downpayment for CAT B a couple of years ago only from 2016 onwards only. Since then officially no more zero downpayment if you are taking loan from banks.. but if taking in house loans from finance company or credit company still can find these zero downpayment schemes 

[Ody_2004]

8 hours ago, Confusedboi said:

Another factor is how much can you loan. I recall around mid 2000’s -2010era can loan up to 100%  over 10 year loan period and pay zero downpayment. Gahmen later on change to minimum 30% downpayment for cat A , max 7 year Loan period  and  minimum 40% downpayment for CAT B a couple of years ago only from 2016 onwards only. Since then officially no more zero downpayment if you are taking loan from banks.. but if taking in house loans from finance company or credit company still can find these zero downpayment schemes 

So this mean the buyer now are real rich type 😁

 

[Scion]

13 hours ago, Watwheels said:

LoL... with the poor global economy outlook, war, fast rising cost of living, the R word is a threat to every country every nation. On May Day our PM also warned us about the uncertain future ahead. But in Singapore COE can hit $100K, HDB(Yishun) can hit slightly over $1mil. Ppl here seems very confident. I dunno what to think. It is very bizzare, confusing and worrying. Lets hope nothing bad will come. 

 

properties certainly is lagging indicator, i guess COE also same

only when recession hit, then will properties and COE come tumbling down

right now, people are still partying, while the good times last 😁

[Wt_know]

6 minutes ago, Scion said:

properties certainly is lagging indicator, i guess COE also same

only when recession hit, then will properties and COE come tumbling down

right now, people are still partying, while the good times last 😁

just like disco ... before the last moment music stop and lights turn on to kick everyone out ...

everybody is HIGH to the MAX ... lol

[SLing]

https://www.straitstimes.com/singapore/transport/on-the-ground-coe-breaching-100000-can-be-a-good-thing

Any subscriber to share full article?  I thinks he suggests getting rid of Cat E, Cat A too cheap, PHV's cause COE inflation, too many rich people etc.  I still don't understand all his suggestions.  I think MCFers will know enough to debate him.  (Sorry Mikk123, think I posted same time as you.  Didn't see your post)

 

Edited June 10, 2022 by SLing

[Arogab]

21 hours ago, Kopites said:

Whatever go up will come down. Is a matter of times.

10 years cycle. The gradient can never be a constant straight line.  Spend within one mean. After all ride is merely a ride. 😁

You are right. Just like if one can afford to go for the 100k COE, but I don't think it is necessary. I do things by the "It's what you need, not what is nice" theory. But then of cos, you sometimes also want to choose the better ones but over a certain limit, you think it is not necessary at all.  

[lexiton]

CAT A going to to hit 200k in this case soon

6 hours ago, mikk123 said:

no worries. I read the physical paper this morning. What he suggested was to move all quota from E to A and also put all the EV into A as well, so as to promote green driving. He also suggested to flatten the COE supply curve, so the quantity supplied is the same, no more high and low seasons. 

 

[Silverkris]

7 hours ago, SLing said:

https://www.straitstimes.com/singapore/transport/on-the-ground-coe-breaching-100000-can-be-a-good-thing

Any subscriber to share full article?  I thinks he suggests getting rid of Cat E, Cat A too cheap, PHV's cause COE inflation, too many rich people etc.  I still don't understand all his suggestions.  I think MCFers will know enough to debate him.  (Sorry Mikk123, think I posted same time as you.  Didn't see your post)

 

SINGAPORE - Certificate of entitlement (COE) premiums for bigger, more powerful cars crossed $100,000 on Wednesday (June 8) - the highest since 1994.

This is not entirely a surprise, given the seasonally small supply of certificates paired with robust demand from a growing affluent class and uncontrolled optimism among fleet operators.

The latter consists of ride-hailing, car-sharing, vehicle subscription, car rental and mobility-as-a-service firms which are tapping into a market of at least 800,000 households which do not have cars.

What does a $100,000 COE mean, though?

By itself, it has little significance, representing increases of a few per cent from the previous premiums three weeks ago. It means consumers will now pay a few thousand dollars more for their cars, which in the bigger scheme of things, is miniscule - given that bigger, more powerful cars often cost upwards of $200,000.

Beyond the obvious, it means the rich have become richer - or become more plentiful. This is reflected not just by the six-digit COE, but by the gap between big-car premium and small-car premium.

Since late last year, the gap has grown from a few thousand dollars to a wide chasm of around $30,000. This difference reflects a wealth disparity which has became starker since the Covid-19 pandemic.

Forbes magazine last year reported that the richest Americans became 40 per cent richer in 2020, partly on the back of soaring stock and property prices. It would be strange if this development was unique to the US.

More broadly, a $100,000 COE means the rich are contributing more to Singapore's tax coffers, which is a good thing.

According to back-of-envelope calculations, $127.7 million was collected in COE revenue from Wednesday's tender, of which more than half came from the B and Open categories. The latter is used almost exclusively for registration of bigger, more powerful cars, and is fuelling the growth in Singapore's car population despite an official zero growth policy.

If this quantum is sustained yearly, COE revenue will amount to $3.06 billion - more than enough to offset the $2 billion spent yearly on public transport subsidies.

And this is just COE, without the slew of other vehicle-related taxes car buyers have to pay here. And like COE, the wealthier cohort pay more of such taxes, including a progressively punitive Additional Registration Fee.

Nothing wrong with that. The rich should give back more to society, and the COE system is one of a few effective levellers in this respect. Stamp duty for the purchase and transfer of properties is the other. Petrol duty is yet another.

A less palatable side of lofty COE prices is it hinders the adoption of cleaner energy vehicles, since most hybrid and electric cars fall under Category B. The tax rebates doled out to encourage the adoption of such vehicles are all but negated by the $30,000 price premium buyers have to pay for their COE.

MORE ON THIS TOPIC

New EV criterion may keep COE prices high despite bigger quota

High COE prices may foil S'pore's car-lite plans

Businesses are not spared. The growing list of car manufacturers looking to sell vehicles directly to consumers will have to set aside a ransom for COE bidding. Unless of course, they adopt Tesla's approach of selling cars without COE. This approach, as seen from past tenders, only puts extra upward pressure on COE prices.

One way of fixing this is to refine the COE system by removing the Open category. This category was put in place in the early years of the system, when tenders were held once a month. It served as a "safety valve" to temper bids from aggressive or speculative bidders.

Currently, tenders are held twice a month. The urgency to clinch a COE to obtain a vehicle is thus reduced. And as mentioned, Open has become the exclusive proxy for Category B.

All things being equal, removing the Open category and redistributing its COEs to the other categories is likely to ease bidding pressure for buyers and sellers of commercial vehicles and smaller cars.

It is likely to have an opposite effect on buyers and sellers of bigger, more powerful cars. They will probably have to brace themselves for further price increases if they do not alter their bidding strategies.

The jewelled class can well afford it. But what about buyers of lower emission vehicles? Well, that can be solved if the power cap in Category A can be raised for electric and full hybrid models.

MORE ON THIS TOPIC

Look at events from 2012 for answers to what is fuelling the relentless rise in COE prices

Car makers adopting direct sales model in S'pore: Can lower prices be expected?

Last month, the Category A power cap for electric cars was raised to 110kW or 148bhp - merely 18bhp above the previous cap. Raising this to 120kW and expanding it to include full-hybrid models will have a more meaningful outcome.

Doing so will increase bidding pressure in Category A, but it will be mitigated by the redistribution of Open COEs.

In fact, a bolder step would be to claw back some Category B COEs for redistribution, since buyers and sellers of Category B cars have long been the sole beneficiary of the Open category.

Another way would be to once and for all delink COE quota from past deregistration of vehicles. This will flatten the peak-and-trough supply pattern which has seen COE prices swinging from below $10,000 to above $100,000.

A flattened supply curve will prove unpopular with those waiting patiently for a COE supply bonanza that is a few years down the road, but it will be positive in the long term.

Better still, do both of the above.

[Albeniz]

Congrats to those who got yourselves a COE back in the year 2019!

Heng ah!