Cat A COE premiums went up on the back of a number of EVs being shifted into this category in the latest bidding exercise, but is there cause for optimism ahead?

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SINGAPORE

The first Certificate of Entitlement (COE) bidding exercise for May 2022 saw a bit of a mixed bag, with premiums in Categories A and B rising slightly, and those in Category E falling significantly.

In Category A, for internal combustion engine (ICE) cars with engines that are less than 1.6-litres in capacity and output of less than 130hp, and electric cars with an output of less than 147hp, prices went up by S$2,202, to end at S$70,901

Category B meanwhile, for ICE cars with engines that make more than 130hp, or are above 1.6-litres in capacity, and electric cars with outputs of more than 147hp, saw a rise of S$2,088 to end at S$92,090.

Category E, which is open to all vehicles except motorcycles, but usually ends up being used for big cars, saw premiums went down by S$4,689 to end the bidding at S$91,112.

The premiums for Categories B and E can be easily explained, as Cat B saw a reduction in its quota of COEs for the three-month period starting from this latest exercise until July, with Cat E having the inverse of seeing its quota increased for the same period. It has also led to the rarely seen phenomenon of Cat E premiums going for less than Cat B, albeit just slightly. 

Cat A meanwhile is a little bit more complicated, but the results are not entirely unexpected. The latest bidding exercise is the first one where a number of electric vehicles (EVs) were reclassified, with those having a power output of less than 147hp being moved to Cat A. This has thus put an upward pressure on prices in Cat A, despite the fact that it has also seen an increase in its quota for the coming three month period.

Industry insiders suggest that there was enough pent up demand for eligible EVs, which include cars like the Kia Niro Electric and MG ZS EV, to drive up Cat A premiums. Dealers were said to be collecting orders for such models from the time the move was first announced in March, before waiting to place their COE bids in the latest exercise in an effort to take advantage of the re-categorisation.

The modest rise though could indicate that prices are likely to level out over the next couple of months at least, with premiums unlikely to see huge fluctuations for the foreseeable future. The large drop in Cat E could also signal that traders, who form a significant chunk of bidders in this category, might be starting to hold off and let things cool down after having seen Cat E premiums come uncomfortably close to the S$100,000 mark earlier in April.

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