But margin of fall, 9.5%, is much smaller than the 20% dip some industry players expected
Fewer car COEs for May-July period Cars and other vehicles along the Central Expressway near the Jalan Bahagia exit. PHOTO: ST FILE

The supply of car certificates of entitlement (COE) for the May to July period will dip by 9.5 per cent to 5,875 per month - a much smaller drop than the 20 per cent shrinkage some motor industry players were expecting.

Announcing the quota yesterday, the Land Transport Authority (LTA) said there would be an average of 8,448 COEs per month for all vehicle categories - 3.5 per cent down from the current quota.

There will be 2,848 COEs per month for cars up to 1,600cc and 130bhp, 13.7 per cent fewer than currently. The supply for cars above 1,600cc or 130bhp will be 5 per cent lower at 2,278 per month.

The open COE - which can be used for any vehicle type except motorcycles but which ends up mostly for bigger cars - will see a 5.7 per cent drop in supply to 749 per month.

Commercial vehicle COE bidders will have 28.1 per cent more certificates, at 779 per month.

The sizeable growth is in spite of certificates used up by the Early Turnover Scheme - an incentive plan that encourages fleet owners to replace older, more pollutive vehicles with cleaner new ones.

For motorcycles, the COE supply will rise by 8.7 per cent to 1,794 per month. This increase was partly bolstered by 877 two-wheeler COEs that expired between January and March.

The fact that the supply shrinkage is far smaller than feared should ease upward pressure on premiums, according to trade observers. Car COEs have shot up by 22 per cent to 28 per cent in the last month.

Others, however, maintain that premiums will ease only if aggressive competition between private-hire operators cools.

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said: "Whether the current prices are sustainable will depend on how consumers react to the new quota."

Industry watchers also point to the 877 expired motorcycle COEs - inordinately high when compared with fewer than 10 seen in other categories - as yet another sign that speculation is rife in the two-wheeler category.

Industry players point to the low deposit required for motorcycle COE bidding - $200 instead of $10,000 for cars - as the main reason for this trend. Speculators thus have little to lose, but their actions drive up premiums.

The LTA, however, maintains that it finds no evidence of speculation or manipulation.