COE Prices Since 2002
Despite the introduction of cooling measures by curbing motor vehicle loans in February 2013, COE prices are converging upwards across all categories. COE for commercial vehicles (Category C) hit a record-high of $76,310 in October 2013. This will place a strain on small-to-medium enterprises (SMEs), such as school bus operators.
Even motorcycles are not spared from the price surge. Category D saw a record-breaking COE premium of $6,801 in April 2015. In comparison, the average price of motorcycle COEs was just $1,757 in 2013, and $4,027 in 2014. Price of paper has tripled in 2 years!
The price jump is due to the 30% reduction of Cat D quotas in 2014 and the panic buying ahead of the Euro III emission standards. Cat D quotas for February to April 2015 have been trimmed yet again, falling from 1,901 to 1,710 over the previous quarter.
COE Quotas Since 2002
Feast or Famine A vicious cycle
"Feast" in yesteryears - Bumper crop of COEs from 2004 - 2008. COEs are valid for ten years, so the first of these bumper crop COEs will expire in 2014.
Now in the "Famine" cycle - Supply tightening began in 2009. During the "feast" years, there were more than 2,000 Category A COEs available for each bidding exercise. The Category A quota has since trickled down to 300+ COEs per bidding exercise (November 2012 onwards).
The Motor Traders Association (MTA) also noted the "feast or famine" cycle in its letter to LTA.
As the bumper crop COEs expire, will the LTA release them back into the market? LTA dropped a strong hint that they intend to increase COE quotas. From February 2014, LTA will reduce the 6-monthly recycling period for determining COE quota to 3-monthly. A shorter recycling period will enable prompt matching of the number of new COEs to be issued to replace de-registered vehicles.
However, if the bumper crop is released back into the market, the symptons are alleviated but the root cause remains. The famine will return (quite timely after GE2016). Is it fair for people to pay wildly different prices for the same COE in the space of a few years? The LTA will lose a golden opportunity to end the "feast or famine" cycle and replace it with a more steady supply of COEs. We are kicking the can down the road.