Certificate of entitlement (COE) prices ended mixed as buyers returned to a weakened car market
COE prices end mixed in weakened car market Industry watchers said while crowds have returned to showrooms, market sentiment was still weak. ST PHOTO: ONG WEE JIN

Certificate of entitlement (COE) prices ended mixed as buyers returned to a weakened car market.

The COE premium for cars up to 1,600cc and 130bhp closed 5.9 per cent higher at $28,589. That for cars above 1,600cc or 130bhp finished 5.3 per cent lower to hit a six-month low of $34,000.

The price for the open COE, which can be used for any vehicle type except motorcycles but ends up mostly being used for bigger cars, tumbled 6.3 per cent to close at a five-month low of $36,901.

Motor traders said most of the sales over the last weekend were for smaller cars - hence the rebound in the COE price for these cars.

The market for bigger cars, however, remained weak.

Mr Neo Nam Heng, chairman of diversified motor group Prime, said the race to meet mid-year sales targets among luxury car brands had contributed to high big-car premiums in the last three months.

"But now that June is over, there is no longer such pressure," he said.

Mr Neo said the strong Japanese yen continued to weigh on the profitability of motor firms in the form of higher cost prices.

"For smaller cars, the difference is around $3,000 each. But for a big car like the Toyota Alphard, the increase can be $8,000," he noted.

The cost increase erodes a car dealer's profit margin, which in turn diminishes its ability to bid for COEs.

The number of car bids received for the latest exercise - 3,708, hardly changed from the previous tender - supports this notion.

"Of course, the car rental operators have already overstretched their fleets, so they are not bidding as aggressively as before," Mr Neo added.

Meanwhile, the commercial vehicle COE premium ended 1.6 per cent lower at $25,089. This is the lowest since 2011, and reflects the weak business sentiment.

The motorcycle premium rose by 2.7 per cent to finish at $3,081.