Rilek1Corner

Tag: COE

  • Keep Calm And Carry On Driving

    Keep Calm And Carry On Driving

    News of growing certificate of entitlement (COE) supplies should not come as much of a surprise now.

    The quota for COEs to own vehicles is determined every three months and has been expanding for around two years. It is expected to keep on growing for at least two more years.

    This is because the bumper crop of cars sold a decade ago are coming of age, and are being deregistered. Fresh COE supplies are determined largely by deregistration numbers.

    The real poser is whether COE premiums will fall in tandem.

    Naysayers may point to how persistently high prices have been in the first half of this year as an indication that “premiums will never fall”. Despite the growth in number of COEs, the amount people paid for them have been hovering between $65,000 and $75,000 – largely unchanged from the previous half-year results.

    Well, premiums should have fallen. They were kept buoyant largely by fear. Firstly, fear that a revised carbon tax scheme would push up prices. Secondly, fear that the Government would implement a zero-growth policy for cars soon.

    Those fears proved unfounded. Car prices have remained largely unchanged since the new tax scheme kicked in on July 1. As for zero growth, it is unlikely to happen in the near term.

    Even if zero growth were to happen, the impact would be minimal because the current allowable growth rate is already near zero, at 0.25 per cent.

    So, will COE premiums fall?

    You bet they will. In fact, they have already fallen substantially – from over $90,000 just over two years ago to around $60,000 at the last tender.

    Will they fall farther? In all likelihood, yes. That is, if consumers do not give in to irrational behaviour.

    Irrational behaviour would be rushing to buy a car at today’s prices despite the fact that there will be more COEs in the pipeline.

    And there will be more COEs. The quota for this calendar year is likely to be around 70,000 – close to double last year’s. Next year, it should rise to 100,000.

    So, why rush? It is one thing if your existing car’s COE is near its expiry date, but quite another to storm the showroom as if it were your last chance to buy a car.

    And if you are shopping for a new car, strike a forward price – that is, what the price is likely to be three to six months down the road. Some motor traders are already expecting COE prices to fall by 10 per cent in the next three months – that translates to a $6,000 reduction. So that would be a good discount to start with if you are car-shopping now. Whatever you do, do not go for “Guaranteed COE” deals – you just end up paying more. Worse, you are subsidising the non-guaranteed bids.

    Authorised agents should wise up to the fact that competition is getting hotter, with a number of parallel importers having gained a level of respectability and consumer trust (quite a few are CaseTrust-accredited now).

    If authorised dealers think that by adopting a high-margin strategy and thus a “high COE strategy”, they can keep out parallel importers (which typically have lower margins and bidding power), they are mistaken. They will, in fact, chase more customers into the arms of parallel importers.

    While demand for cars may have risen with Singapore’s growing population and rising income, actual liquidity may at the same time have been dampened by high mortgages and overall inflation.

    Also, the current global economic uncertainty has not been fully factored in. How big a fallout will the Greece crisis be? Or closer to home, China’s cooling economy?

    These factors will no doubt influence COE prices. But as history has shown, the biggest influence has always been the size of a quota.

    And the quota is getting bigger.

     

    Source: www.straitstimes.com

  • Lui Tuck Yew: ERP Revenue Fell Last Year

    Lui Tuck Yew: ERP Revenue Fell Last Year

    The Government collected S$152 million in Electronic Road Pricing (ERP) revenue last year, which is a dip from the S$160 million consistently collected in preceding years, said Transport Minister Lui Tuck Yew to Parliament on Wednesday (Mar 11).

    This was in response to questions from several MPs who wanted to know if ERP rates could be adjusted on certain roads.

    Mr Lui said the smaller revenue is in part due to the opening of the Marina Coastal Expressway, which saw ERP charges along both the MCE and ECP, lowered, for three consecutive quarters.

    He explained that the optimal speed for expressways is 45 to 65km/hour. When speeds reach above 65km/hr, ERP charges are lowered or removed. Correspondingly if speeds go consistently below 45km/hr, rates are raised, for the particular time belt. The same goes for arterial roads.

    The speed parameters for that is between 20 and 30km/hr. If speeds are consistently above the upper threshold, ERP charges will be reduced, and likewise raised, if it is consistently below the lower threshold.

    Mr Lui added that charges for entry into Orchard Road will remain, on Saturdays.

    “We still feel that there is a need to have this on Saturday afternoon. And for those who find the ERP charge is a burden, then maybe the possibility is for them to shop on Sundays instead because Sundays is entirely free and the traffic speeds a little bit better,” he said.

     

    Source: www.channelnewsasia.com

  • When Is A Good Time To Buy A Car?

    When Is A Good Time To Buy A Car?

    Is it a good time to buy a car?

    I get that question a lot but, in recent months, it has almost become a de facto greeting. Instead of “hello”, “how are you?” or “it’s a hot day, isn’t it?”, I get: “Is it a good time to buy a car?”

    I will try my best to answer the question which has obviously been keeping many Singaporeans awake at night.

    I will start by saying it is an irrelevant question – for the vast majority, anyway. Today, your decision to buy a car depends much less on where certificate of entitlement (COE) prices are at, than how old your current vehicle is.

    More than half of Singapore’s private car population is currently more than seven years old.

    That is quite a phenomenon, especially when you consider that we had one of the youngest car populations in the world merely a decade ago.

    The state of affairs has to do with how COE supplies are determined here, but more on that later.

    So, with so many old cars on the road, the pertinent question is: How many more months do you have before you need to scrap your current ride?

    Got it? Now, just before the end of that period would be a good time to buy.

    Going by anecdotal evidence, this is how motorists have been behaving. Because COE prices are so high, most people are keeping their cars until the last possible day of the vehicle’s 10-year statutory lifespan.

    I say most people because there are those with means who will buy regardless of price. These folks do not ask “is it a good time to buy a car?” Rather, their de facto greeting tends to be “what is a good car to buy?” If you belong to that group, you can stop reading now and go to Life! Motoring to check out this week’s suggestions.

    For the rest of you, and I count myself among you, I stand by my earlier recommendation: Use your car to the fullest – it not only makes good economic sense, but it is also environmentally sound.

    That is exactly what I am doing with my Toyota Wish, which is 91/4 years old now. I bought it in 2006, with a $9,000 COE.

    COE premiums are highly unlikely to ever go back to that level. Singapore’s human population has grown by 23 per cent – or one million people – since 2006.

    So, demand for cars has gone up significantly.

    The way COE supply is formulated has also changed. Today, supply – determined every three months – hinges on the number of vehicles scrapped in the preceding three months.

    Thus, supply tends to lag behind real demand. In the past, the allowable annual growth of 3 per cent might have masked this lag. But now, with the allowable growth rate at 0.25 per cent, any new injection of COEs is too minuscule.

    To illustrate, this rate translates to merely 134 fresh car COEs per month in the current quota period. Or 3.5 per cent of the total number of COEs available to car buyers.

    It is not a pretty picture. Nevertheless, the quota is poised for a dramatic growth between now and 2017, before it starts to taper again from mid-2018.

    With this supply explosion, prices will be on a downward trend. They could be as low as $30,000 for Category A (cars up to 1,600cc and 130bhp) and $40,000 for Category B (cars above 1,600cc or 130bhp). When? Sometime between 2016 and 2017.

    But that is irrelevant if your car is due to expire earlier.

    If your car has a couple more years before its time is up, you are in a good position because the ensuing COE bonanza is likely to translate to prices substantially lower than at present.

    This will happen provided the Government does not hold back some certificates for the next “dry spell”, which is due to start in late 2019.

    Even though Transport Minister Lui Tuck Yew first mooted this three years ago, there has been no word yet on whether he will do it.

    There has been much speculation. One recurring theory is that the Government will not do anything that is as unpopular as this before elections.

    And indeed it will be unpopular even though, over the long term, it will lead to more stability for car buyers and sellers. Unpopular because it will lead to tens of thousands of car-owning households not being able to own a car, at least in the medium term. And it will lead to COE prices heading for the moon in the near term.

    This implies that any decision to hold back COEs will be made after the polls.

    I know what you are thinking now. Better buy soon, before the election is called. But that would be foolish. One, very few people know when elections will be called. Two, a pre-election rush to the showroom will lead to only one thing: higher prices.

    Barring systemic changes, I stick to my original advice: Buy only when your car is near expiry. And if prices are still high then, consider revalidating your COE for another five or 10 years. It may still be a costly move but, in the long run, far less expensive than buying another car.

     

    Source: www.straitstimes.com

  • Improve Public Transport To Curb Car Usage

    Improve Public Transport To Curb Car Usage

    I refer to the letter “Reasons for petrol duty hikes sound” (Feb 26).

    Curbing carbon emissions and car usage may seem sound enough reasons for the hikes, but the frequent jams and slow traffic on our roads are underlying symptoms of a bigger problem: A lack of efficiency in our public transport system.

    On the day the Budget and the petrol hikes were announced, the irony was not lost on us that a track fault caused a disruption in train service. (“North South Line hit by hours-long train service disruption”; Feb 23, online)

    Other everyday problems, such as being unable to board a packed train or attempting to board a single-deck bus during peak hours, are some of the factors that push people to own a car.

    I do not own one and the writer might consider car ownership as a privilege, but with the problems many of us face when using public transport, owning a car has become a necessity, especially for families with young children or seniors.

    As the writer mentioned, an array of measures is required to ensure that our roads are smooth. Then, the best way to curb car usage is to improve our public transport and make people want to use an efficient, world-class system.

    After all, if one is going out with one’s elderly parents, would they rather be seated comfortably in a car or squeezed into a packed train without a seat?

     

    Source: www.todayonline.com

  • Fewer Cars On The Roads As COEs Play Catch Up

    Fewer Cars On The Roads As COEs Play Catch Up

    Singapore’s private car population has fallen to its lowest level since 2011, and the shrinkage could continue.

    The latest available figures from the Land Transport Authority show that there were 598,219 cars as of the end of last month – down from 600,176 last year. The number stood at 607,292 in 2013, and 605,149 in 2012.

    The car population is now at its lowest since 2011, when there were 592,361 cars on the road.

    The shrinkage is a rare occurrence in Singapore, where a quota system allows the vehicle population to grow annually at a pre-determined rate.

    Observers said the contraction is a sign that the supply of certificates of entitlement (COEs) is lagging behind actual replacement demand.

    Since 2010, COE supply has been formulated largely by the number of cars scrapped in the preceding months. This often does not correspond with the number of cars scrapped in the following months. For instance, last year’s May-July COE quota for cars was determined by the 7,083 cars scrapped from February to April. But actual scrappage from May to July was higher at 7,514.

    Over time, this leads to a population shrinkage.

    NUS Business School Associate Professor Chu Sing Fat said the shrinking Open category, which can be used for any vehicle type but ends up mainly for cars, also contributes to the phenomenon.

    Mr Lee Hoe Lone, managing director at Audi agent Premium Automobiles, said: “It will be worse if they start holding back some COEs.”

    He was referring to a widely expected move by the Government to “save” some COEs arising from the 2015-17 supply bonanza for the next low-supply period starting from 2019.

    “The writing is on the wall,” said Dr Park Byung Joon, an urban transport management expert at UniSIM. “I do not see any other way to avoid having a few years of massive COE supply followed by a dry spell.”

    National University of Singapore transport researcher Lee Der Horng concurs, adding that “a more equalised COE supply between years is more healthy”.

    While motor traders agree that a peak-and-trough COE supply pattern is not desirable, they reckon an adjustment – by holding back some certificates – will not be well received by consumers who have been waiting for supply to surge.

    “If they hold back 30 per cent of next year’s supply, it could potentially mean 30,000 car-owning families giving up their cars,” a trader said.

    Jardine Cycle & Carriage managing director of motor operations Eric Chan suggested that Singapore could accommodate a higher vehicle population once the second generation of Electronic Road Pricing (ERP II) is up.

    On top of time and location, ERP II can charge according to distance clocked. With the system, expected to be ready before 2020, Mr Chan said “we can have higher car registrations but fewer cars on the road”.

    But even if COE supplies are not tweaked, the car population is likely to shrink for a few more years if the current COE quota formula is not changed.

    Observers pointed out that the Government aims to raise public transport’s share of morning peak journeys to 70 per cent by 2020 – up from 63 per cent in 2013.

     

    Source: www.straitstimes.com