Higher COE prices are already slowing mainstream car sales

Derryn Wong

The numbers show that as COE prices rise, the luxury/mainstream divide shrinks, and mainstream brands will feel the heat


CarBuyer’s First Law of Certificate of Entitlement (COE) Prices states: As COE prices rise, the market swings to favour luxury brands rather than mainstream ones. 

CarBuyer’s Second Law of COEs states: As COE prices rise, the amount of vitriol spewed forth by mainstream buyers rises in proportion.

If you’ve never heard of those laws before, that’s because we just made them up. The Second Law is obviously us having a laugh, but the First Law we only wish was a sad joke.

How does this relate to COE prices? In September’s COE bidding, we saw price rises some to recent highs. Category A, for ‘mainstream’ cars with engines up to 1.6-litres in capacity and with less than 130hp, rose from S$37,766 to S$38,504. That’s the highest Cat A has been since May 2018, when it hit S$38,941, 

Category B, for ‘luxury’ cars with engines more than 1.6-litres in capacity or with more than 130hp, dropped a tiny bit, from S$41,510 down to S$40,989. A drop yes, but still enough to be the highest we’ve seen the price since October 2019, when it was S$41,805.

Just to give more context, this marks the fourth consecutive price spike for Cat A, and the third for Cat B, the recent price dip aside. 

Our previously COE analysis story showed how recently that one in four cars sold here was a BMW or Mercedes in July. We looked only at the car sales figures for July 2020 then, but this time we decided to delve a little deeper.

The average COE price of Cat A is already S$11k more than last year: S$25,920 in 2019, and S$36,912 for 2020.

COVID’s effects have made 2020’s sales figures small – compare 26,498 cars sold here from Jan to August, that 72,344 new cars were registered here in 2019 – but three months of zero sales and COE quota cuts will do that. 

But as explained in our previous COE analysis column, it’s wishful thinking that things like a global pandemic or possible recession will put a dent in COE prices, simply because there’s much more demand than supply. 

The top four best-selling brands from January to August are, BMW (2,192), Mercedes-Benz (3,698), Honda (4,304) and Toyota (4,429), again out of a total of 26,498 cars sold here to date. 

Doing the math, that means 22 percent of new cars sold here were BMWs or Mercedes-Benzes, and 33 percent were Toyota/Hondas, just over one in five and one in three, respectively. That’s obviously not a complete ‘lux vs mainstream’ picture, but consider the top four brands have something like 55 percent market share here.

Compare that to 2019’s figures: 18 percent for the Germans, and 39 percent for Toyota/Honda. Then look at the average COE price of Cat A: S$25,920 in 2019, and S$36,912 for 2020 (Jan to Sept). I.e. it’s currently already S$11k more than last year

To get back to another sales metric, only four brands sold more than 500 cars here in August – no prizes for guessing which four. 

So rising COE prices mean less mainstream car sales, and the effect is already noticeable at the current COE levels, and in fact this price increase has not been a surprise since we already predicted it in late 2019 with our online story ‘Why COE Prices Will Rise In 2020 And Beyond’.

Back then we said COE prices wouldn’t hit the unfriendly S$50k price level ‘for some time’. Sad to say, ‘some time’ is dawning upon us already. 


Analysis buying advice Certificate of Entitlement coe industry sales

About the Author

Derryn Wong

CarBuyer's former chief editor was previously the editor for Top Gear Singapore and a presenter for CNA's Cruise Control motoring segment.

Leave a Reply

Your email address will not be published.

CarBuyer – Revolutionizing The Online Car Marketplace In Singapore

Buy Used And New Cars Online
Start your car buying journey with CarBuyer as we connect you seamlessly to the industry’s best CaseTrust-SVTA accredited car dealerships. As a one stop car online portal you can now buy your new ride, be it a pre-owned car or a brand new car from trusted dealers all over Singapore, all in one place. Our ever expanding listing of quality and covet-worthy cars, new and second hand, from both owners and trusted car dealers, will leave you spoilt for choice. Refine your search by vehicle type, registration year, price, mileage, engine type, transmission, annual depreciation value and more to find the car that best suits your needs, taste and lifestyle. You can even search for your car by dealer or directly by owner.

Sell Your Car In An Instant With Confidence
We all know how selling a car in Singapore can be a daunting task especially for a first time car seller; from trying to get a valuation for your car, finding a trusted dealer, to getting the best quote on your vehicle. CarBuyer understands the hassle and even the costs involved and have as such partnered with Huawei to develop a FIRST in Southeast Asia AI car valuation tool that is able to provide a car’s resale value at the snap of a finger. Backed with a consortium of trusted CaseTrust-SVTA accredited car dealers you can be assured that you are getting the best price for your vehicle and do not have to worry about any hidden costs.

The Ultimate Car Shopping Experience Online
CarBuyer platform is the first of its kind to be backed by Huawei’s Artificial Intelligence and cloud computing, enabling it to be able to offer users transparency and enhanced security, all with the one aim of enhancing customer experience. So come on over to buy and sell used cars online at the best prices at CarBuyer Singapore. Connect easily with dealers in real-time via our online video call feature, or schedule a test drive when you’re ready. Have some questions? Get them answered instantly with our chatbot moderated by our responsive team. Stay in the loop with our car-related tips, reviews and news. Learn the ins-and-outs of your car, as well as global and Singapore’s car updates at your own pace.