Car COE supply to dip by 6.6 per cent for next three months

The supply of car certificates of entitlement (COEs) will dip by 6.6 per cent in the three-month quota period starting next month.

In its regular quota announcement yesterday, the Land Transport Authority (LTA) said the monthly average will be 1,605 COEs for cars up to 1,600cc and 130bhp, and 1,541 COEs for cars above 1,600cc or 130bhp.

The average monthly supply of Open COEs, which can be used for any vehicle type except motorcycles but end up mostly for bigger cars, will be 394.

The total of the three categories works out to 3,540 a month, or 6.6 per cent less than the 3,792 available under the current quota.

Commercial vehicle buyers and sellers will have a bigger contraction of 26.8 per cent, with the monthly average falling from 314 to 230.

Motorcycle COE supply will drop by 27.6 per cent to 889, from 1,228.

Motor dealers said the shrinkage is not unexpected, but reckon that the contraction in car COEs was mitigated by the surge in the revalidation of COEs from 2016.

This is because those who revalidated after 2016 may also have decided to scrap their cars early.

COE supply is determined mainly by the number of vehicles deregistered in the preceding three months; cars with five-year revalidations cannot have further extensions and must be deregistered.

Some observers, however, wonder how the shrinkage could have happened, given that car deregistrations in the April to June period were noticeably higher than in the preceding three months.

The LTA pointed out that this was because COEs carried over from the suspension of trading in April to June last year - during the circuit breaker period - would have already been redistributed by this month. Thus, the new quota period starting next month no longer has this component.

Motor dealers said the shrinkage in car COEs is unlikely to affect premiums significantly.

But the story is different for commercial vehicles and motorcycles.

With their COE quotas slashed by more than a quarter, premiums are set to rise.