Certificate of entitlement (COE) premiums continue their upward trend for the 5th consecutive time (as of 17th April 2019). Can we expect COE Premiums to continue the climb up? How will this affect you as a car owner? Is this the right time to get a new car? We will explore this topics below.
2018 had been a great year for car buyers with regards to COE premiums. Car buyers have enjoyed a year long period of relatively low COE prices with Category A (aka CAT A) premiums floating at $23,000 to $33,000. What was most surprising, was that Category B (aka CAT B) premiums (which are traditionally higher than CAT A) have on average, seen lower prices than CAT A COE premiums.
While fluctuations in COE Premiums are a given, sharp changes are typically rare and happens only during “economic crisis” and exceptionally specific situations. Otherwise most COE trends tend to happen over a prolonged period of time.
Will COE premiums continue to climb up?
The short answer is “probably yes”. Nobody can really predict the future for sure, however we can base our predictions on historical data and current market situations. Historically, the average COE premium lies around $49,644.00 and 2018 was seen as an anomaly as far COE premiums go. The current rising COE Premiums could be attributed to a few causes:
- COE growth was cut to zero
- New car dealerships’ (especially authorised distributors) sales have enjoyed a phenomenal 4th quarter 2018 and 1st quarter 2019 and these cars are starting to reach Singapore and getting registered
- We have enjoyed COE premiums at its lowest in 8 years and COE Premium tend to normalize back to its average prices (barring any economic or specific situations)
While we expect COE Premiums to continue that upward trend, do note that it is absolutely normal for prices to drop in the next 1 to 2 bids as consumers contemplate their actions. It is extremely rare to see a straight line increase in prices.
Should you buy a new car?
While COE Premiums are climbing quick, current COE Premiums are still at a discount from it’s average levels of $49,644.00.
Having said that, you should never let car prices be the only motivating factor to your purchase. However, if there are changes in your family and needs, the answer is a definite yes. Do take note that, we do expect COE Premiums to continue their upward trend and if you are buying a new car, please ask for guaranteed COE to avoid disappointments or potential disputes with your dealer.
How does this affect me as a car owner?
If you intend to continue enjoying your current car? Nothing really. However, if you have plans to sell your current car, than yes, higher levels of COE Premiums means that demand and prices for used vehicles will rise in tandem.
While the above is true, do take note that there really isn’t a best time to sell your current car. One of the most common question that our customers at OTUA ask:
“If I wait, will I be able to sell higher?”
The answer is “99.99% of the time, no”. While used car demand and prices will rise or fall according to COE Premiums, the effects are often delayed. Furthermore, one have to always remember that cars are a depreciating asset; a regular Japanese car depreciates at a rate of $800 to $1200 per month and this figures are compounded for Continental cars. There is almost no chance for a regular car owner to sell his car for more “months later”.
Also, even if you were able to capitalize on any potential sharp increase in prices for your current car, your next purchase will almost definitely be just as expensive. Unfortunately, we are all at the mercy of the markets and more often than not, if you sell high, expect to buy high as well.
At OTUA Connect!, our Client Advisors are trained to sniff out potential market changes and update you accordingly so you can sell easy and fairly. You can always drop by our lounge during our operating hours for a discussion on your car and how we can help you sell better.
Too long, didn’t read…
- COE Premiums are expected to rise in 2019
- Prevailing COE levels are still considered a discount from historical averages
- You should get a new car now if you need to
- If you are selling your car, there is never a best time
- Cars are a depreciating asset, the longer you wait, the lower you sell
Have you purchased your next car? Always remember that trade-in prices are typically the lowest you can get for your current used vehicle. Get the highest dealer quote at OTUA Flash-sale! or alternatively try OTUA Connect! and our team of experts will help you sell your car to a direct buyer for more!