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how to solve COE volatility? Gov doing the pricing


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Turbocharged

Let's get a few things out of the way:

- LTA is currently committed to a zero growth policy.

- The supply of COE is not constant because of variable quotas in the past

- Deregistrations can only be projected so far (expiry at 5/10 year mark), you cannot predict early deregistrations, renewals for 10 year COEs, etc.

While LTA can and has reduced the lag effect to better iron out fluctuations, there are factors it cannot predict:

1. Economic conditions. You would think bad times COE low good times COE high, but the economy is struggling to get out of COVID and gets knocked back down by Ukraine war, and yet still COE is bouyant. Why? It may have been crypto, it might be big corporate entities buying up fleets. Who can predict?

2. Buyer behaviour. As much as they try to promote car-lite and pour billions into mass public transport infrastructure, it has not lessened demand. Anytime the COE isn't $1, there are more people who want a COE than there are COE available. 

3. COE is still the neatest method of means-testing. If you can afford it, great. If you can't afford it and you still want it, you gotta make sacrifices. By thinking up all sorts of schemes to subsidize COE or to stabilize supply fluctuations only makes it more like a tax and we already have plenty of those for cars alone. If everyone in Singapore who can afford a car at its true cost gets to own one, Singapore will simply be one giant carpark.

Other ideas like bid your own COE, control the maximum loan and loan tenure have all been carefully tweaked to ensure the banks have some loans to give and yet enough of the buyers don't terribly exceed their TDSR and default on their debt. There's obviously loophole exploits, but it seems the G is happy to keep the problem small without spending disproportionate amounts of time and effort "solving" it. 

Just like COE. Does it need "solving"?

Its just like any other commodity. If you can afford, you buy. If you can't you save up or you make do without. 

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6th Gear
(edited)
3 hours ago, shrjun said:

The big G doesn't think that the COE price is a problem.

We can discuss the many ways to cut down price till the cows come home with no change expected from the current system.

For one I do not understand how 500 bidders can get the COE to $110K . Why not $1k or why not $1 million 😄.

Because there are many many more bidders at $1k.

If 1 seller  suddenly drop selling price by $100k, the showroom will be throng with buyers. But can they get the coe? Cannot, as the seller will be bidding only $1k

Edited by Lotr
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6th Gear
2 minutes ago, Macrosszero said:

Let's get a few things out of the way:

- LTA is currently committed to a zero growth policy.

- The supply of COE is not constant because of variable quotas in the past

- Deregistrations can only be projected so far (expiry at 5/10 year mark), you cannot predict early deregistrations, renewals for 10 year COEs, etc.

While LTA can and has reduced the lag effect to better iron out fluctuations, there are factors it cannot predict:

1. Economic conditions. You would think bad times COE low good times COE high, but the economy is struggling to get out of COVID and gets knocked back down by Ukraine war, and yet still COE is bouyant. Why? It may have been crypto, it might be big corporate entities buying up fleets. Who can predict?

2. Buyer behaviour. As much as they try to promote car-lite and pour billions into mass public transport infrastructure, it has not lessened demand. Anytime the COE isn't $1, there are more people who want a COE than there are COE available. 

3. COE is still the neatest method of means-testing. If you can afford it, great. If you can't afford it and you still want it, you gotta make sacrifices. By thinking up all sorts of schemes to subsidize COE or to stabilize supply fluctuations only makes it more like a tax and we already have plenty of those for cars alone. If everyone in Singapore who can afford a car at its true cost gets to own one, Singapore will simply be one giant carpark.

Other ideas like bid your own COE, control the maximum loan and loan tenure have all been carefully tweaked to ensure the banks have some loans to give and yet enough of the buyers don't terribly exceed their TDSR and default on their debt. There's obviously loophole exploits, but it seems the G is happy to keep the problem small without spending disproportionate amounts of time and effort "solving" it. 

Just like COE. Does it need "solving"?

Its just like any other commodity. If you can afford, you buy. If you can't you save up or you make do without. 

what you say is logical and makes sense. I think government needs to smooth out the numbers, so we won't have high and low years and some drive a car for a few years and selling at even higher price? And curb loan requirement and make sure those who cant afford it don't join the fun when the COE falls and have problem later sustaining it. 

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Turbocharged
11 minutes ago, Macrosszero said:

Let's get a few things out of the way:

- LTA is currently committed to a zero growth policy.

- The supply of COE is not constant because of variable quotas in the past

- Deregistrations can only be projected so far (expiry at 5/10 year mark), you cannot predict early deregistrations, renewals for 10 year COEs, etc.

While LTA can and has reduced the lag effect to better iron out fluctuations, there are factors it cannot predict:

1. Economic conditions. You would think bad times COE low good times COE high, but the economy is struggling to get out of COVID and gets knocked back down by Ukraine war, and yet still COE is bouyant. Why? It may have been crypto, it might be big corporate entities buying up fleets. Who can predict?

2. Buyer behaviour. As much as they try to promote car-lite and pour billions into mass public transport infrastructure, it has not lessened demand. Anytime the COE isn't $1, there are more people who want a COE than there are COE available. 

3. COE is still the neatest method of means-testing. If you can afford it, great. If you can't afford it and you still want it, you gotta make sacrifices. By thinking up all sorts of schemes to subsidize COE or to stabilize supply fluctuations only makes it more like a tax and we already have plenty of those for cars alone. If everyone in Singapore who can afford a car at its true cost gets to own one, Singapore will simply be one giant carpark.

Other ideas like bid your own COE, control the maximum loan and loan tenure have all been carefully tweaked to ensure the banks have some loans to give and yet enough of the buyers don't terribly exceed their TDSR and default on their debt. There's obviously loophole exploits, but it seems the G is happy to keep the problem small without spending disproportionate amounts of time and effort "solving" it. 

Just like COE. Does it need "solving"?

Its just like any other commodity. If you can afford, you buy. If you can't you save up or you make do without. 

Very well said. 

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Supersonic

Why keep patch work fix a flawed system?

COE that has 20yrs validity and do not allow for COE extensions by end of 20yrs.

Mandatory yearly vehicle inspection on annual basis to keep all cars road worthy.

Anyone who want to keep the car beyond 20yrs have to go onto "classic" car low usage ownership scheme.

 

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Hypersonic

I predict there will be no more lean years when COE is low.

It will be high forever so why worry about swings?

:D

It will just swing from high to higher.

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Turbocharged
(edited)
11 minutes ago, mikk123 said:

what you say is logical and makes sense. I think government needs to smooth out the numbers, so we won't have high and low years and some drive a car for a few years and selling at even higher price? And curb loan requirement and make sure those who cant afford it don't join the fun when the COE falls and have problem later sustaining it. 

The TDRS and credit check are already in place to ensure affordability.  If a car is selling at say $150,000, one has to be able to pay $60,000 cash downpayment, and credit check will ensure the buyer has disposable income enough to pay monthly.

Edited by Ingenius
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Turbocharged
4 hours ago, Wind30 said:

I think the more commonly accepted problem of COE if that the price swings too much until it is like lottery as others would say. So what is the solution.

.....

5) If we sell out, we can take a certain portion of the reserve COE to meet the sudden demand. If the demand is too big, it is by drawing lots to decide allocation. That is why we need to have more frequent COE bidding as you cannot be sure you will be successful. To solve this problem, we can also create a new Cat COE where it is by bidding. If you are time sensitive, you can go there. We also want to adjust the price faster so we don't have a sell out situations often and run out of reserve COEs.

 

Drawing lots will create profiteering.  As long as COE demand is higher than supply and the luck of the draw will earn a profit, people will venture into drawing lots, which in turn will spiral up the price and volatility.

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Supersonic
4 hours ago, Carbon82 said:

My simple proposal is pay what you bid instead of lowest successful bidding price. Another way, which will be unfavorable to the lower end buyer is bid for your own coe, and full cash for the bid (not just $10K when submitting the bid). 

I understand your good intention but your proposal is almost the same as current bidding scheme, and we all know demand will forever outstrip supply, so it would not work as intended. 

A nice simple proposal. I support this. No dealers. 

Bid on your own, pay as you bid, pay in cash. 

It could even be a slogan! 😁

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2nd Gear

They just need to flatten the curve.

So, in years such as this when there’s a drought, the Govt can release more COE than deregistration. 

So it’s like an IOU.

Then in future, when the cycle return back up, can reduce the number of COE.

 

Essentially, due to this, the total number of cars on road my fluctuate slightly, but I think that’s ok, cause eventually, the total number of cars would be the same.

 

The implementation could be something like total number of cars/10 - avg COE renewal in past 10 years = annual coe available.

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6th Gear
15 minutes ago, Ingenius said:

The TDRS and credit check are already in place to ensure affordability.  If a car is selling at say $150,000, one has to be able to pay $60,000 cash downpayment, and credit check will ensure the buyer has disposable income enough to pay monthly.

I understand some dealers have ways to let buyers take 100% loan right? 

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Yeah, at the end of the day, car is not a necessity in SG. If cannot afford, there are many options that are almost as convenient.

Save your proposals for the day when there is food shortage. That one I agree, cannot be bidding system and gahmen must step in, if not people will die of hunger!

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Turbocharged
(edited)
6 minutes ago, mikk123 said:

I understand some dealers have ways to let buyers take 100% loan right? 

That is commercial vehicle.  One has to register a company, submit documents and pass necessary checks, including credit check.  No lender will lend for car buying if one cannot prove he is able to afford it.   It is not so easy.  And the cost and taxes that comes with it makes it not worth while.  But it is there for a reason, like support businesses.

Edited by Ingenius
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Hypersonic

The Gov should just make it short & simple.. 2 Cat : 1 for car and 1 for motorcycle..

Min bid for cars from 150k onwards..

Good for the economy and current car owners..

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Supersonic
(edited)
52 minutes ago, Vratenza said:

Why keep patch work fix a flawed system?

COE that has 20yrs validity and do not allow for COE extensions by end of 20yrs.

Mandatory yearly vehicle inspection on annual basis to keep all cars road worthy.

Anyone who want to keep the car beyond 20yrs have to go onto "classic" car low usage ownership scheme.

 

I think my car at 20 year old will have 150k km or less mileage, lower than those PHV at 3 year old. So why penalise low mileage owners? COE is to control car number and congestion. Whether it is a 20 year old car or a brand new car, it takes up the same road space.

Want to bring down COE premium? Then make the PHV buyers pay a surcharge of 4 times the COE premium to reflect the much higher usage and contribution to congestion. That will level the playing field.

 

PS when COE is $250K I think I will just buy a few classic cars (use 45 days each year, maybe 3, 4 enough) and treat like rental....

Edited by Volvobrick
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Turbocharged

The intention of COE has always been to be a revenue stream for the coffers. 

Whatever ideas anyone has, none will be taken up UNLESS it promises increased revenue to the coffers.

By cutting COE quota every quarter with unrelenting demand especially from taxis and PHVs, the revenue is literally begging to enter the coffers.

Short and sweet. High demand + low supply = high revenue

Is the above statement clear enough? :D

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Supersonic
9 minutes ago, Kklim said:

For a start, have a separate category for taxis and PHV vehicles 

Taxi don’t affect the price. 

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