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COE July First Tender: The Not-So Great Divide

In our experience, the higher Certificate of Entitlement (COE) prices get, the weirder things get. Part of that is math – the higher prices are, the more room there is for distortions. The other part of that is psychological. 

But first, let’s look at what happened to COEs in July’s first round, then relate it to the bigger picture.

Category A, for ‘mainstream’ cars with engines up to 1.6-litres in capacity and with less than 130hp, saw a modest dip from S$47,821 to S$45,001. 

Category B (i.e. the ‘luxury’ category, for cars with engines larger than 1.6-litres, or with more than 130hp) saw a tiny uptick, going from S$56,032 to S$56,100. 

Category E, the Open Category for registering any type of vehicle (but almost always a proxy for Category B since that is almost always the most expensive COE category) dipped from S$61,112 to S$57,700

For July, it’s a welcome respite from generally sustained, high COE prices which have been in effect since April 2021, and it illustrates two things. 

One feature of the COE system is its reactiveness – notice how the line (for all categories, except motorcycles which is just flat out insane now) looks like an undulating wave – it goes up, people back off buying, it goes down, people come back to buying and so on. 

The second thing to note is that now Category A and B behave differently, and at times, independently. This happens more as prices rise, due to the different ‘pocket depths’ of each category’s main audience. 

Look at our chart again and see that as prices rise, the gap between the two also expands: Before April 2021, A and B track each other very closely, but after April, which is when prices really shot up, they are a lot less uniform.  

In fact, the price gap between A and B in 2020 was less than S$3,000 on average for the whole year. To date in 2021, it’s already S$8,605 – but it matters less in 2021. 

In the past, that would channel mainstream buyers to Category A, and they would not consider a Cat B car on pain of death, almost. That’s changed though, with the Vehicular Emissions Scheme (VES) helping promote cleaner, less pollutive cars.

For example, for the same price – would you take a Cat A 1.3 with 129hp, or a Cat B 1.5 with 148hp?

If we used the Renault Captur and Volkswagen Golf 1.5 eTSI as the examples, you wouldn’t pay much more road tax, and also save more fuel in the long run for the VW. 

As long as you’re not buying a sports or high-performance car, the practical gulf between COE Cat A and B cars is fuzzy. So like any clever car buyer, do your sums, figure what’s most important to you, and make your purchase accordingly. 

This article was first published in Carbuyer.com.sg.

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