Rush for cars to rise until VES kicks in: Dealers
New standards will affect buyers in the market for diesel cars most
Demand for diesel cars is expected to continue to rise until the new Vehicular Emissions Scheme (VES) comes into effect next year.
From Jan 1, the VES will replace the current Carbon Emissions-based Vehicle Scheme (CEVS) to reduce harmful vehicular emissions.
Under the more stringent VES, which will run for two years, there will be five bands instead of the current nine, with the maximum rebate or surcharge lowered by $10,000.
Also, four more pollutants will be included in addition to carbon dioxide: hydrocarbons, carbon monoxide, nitrogen oxides and particulate matter.
The new standards will affect buyers in the market for diesel cars most since they produce more nitrogen oxide and particulate matter than petrol cars and face a surcharge of up to $20,000.
That's led to a higher demand for them now.
Mr Axel Fey, 28, sales manager at Republic Auto, said the recent rise in Certificate of Entitlement (COE) prices also explains this.
"It's a knee-jerk reaction to the announcement of the VES," he said.
Mr Fey added that, while diesel cars will be more expensive under VES, mid-tier petrol cars will most likely remain in the neutral band, which does not gain rebates or incur surcharge .
"Due to their less extreme emissions levels compared to diesel cars, they are likely to remain status quo."
On the other hand, prospective buyers of higher-end cars with engines of larger capacities will enjoy a reduced maximum surcharge under VES.
But Mr Colin Lim, 39, the executive director of Thong Lee Trading, said that despite the $10,000 drop in surcharge for these cars, which generally tend to be more pollutive, it is "usually negligible to these buyers who are already paying large sums for their cars".
Mr Lim added that later this year, there may be a rush for COE bidding for cars that benefit under CEVS.
"For example, it would be wiser to get a Toyota Prius now since it currently enjoys a $30,000 rebate under CEVS. With VES next year, it will fall into the neutral band and there will be no rebates at all," he said.
But next year, demand might dip due to higher overall car prices, resulting in lower COE prices, said Mr Lim.
"So COE prices will be moderated to an acceptable price to consumers at the end of the day."