From $2 To $7,721

TODAY, Thursday, 04th December, 2008
Tight credit lines actas brakes, even as small car premiums and dealer prices rise:
Neo Chai Chin
chaichin@mediacorp.com.sg:
IT was largely expected: The$2 Certificates of Entitlement (COE) for small cars proved a fluke, as prices in that category yesterday rebounded to $7,721. The figure, though, is still the third-lowest since 2005. A total of 3,149 bids were received for the 1,840 COEs on offer — a contrast to the last exercise on Nov 19, when the number of bids exceeded the quota by just one. Prior to the $2 fluke, small-car COEs had gone for $10,455 early last month. The latest premium falls within the range of what car dealers expected, and they believe COE prices will hold stable until the Chinese New Year.
"I think buyers are trying to get (their cars) before the festive season, so in the short term, COE prices should be around this (range)," said Mr Neo Nam Heng, president of the Singapore Vehicle TradersAssociation. He reckoned that dealers would need two more months to bid for COEs, to clear all the orders placed in the last two weeks.
Dealers had slashed prices by up to $10,000 in the wake of the record-low COE premium. But prices have inched up by a few thousand dollars since, moderated by market sentiment which is still relatively weak. Mitsubishi, for example, plans to raise prices for cars below 1,600cc by $1,000 soon, after a recent increase of the same amount. "Prices won't go up drastically," said a spokeswoman for its distributor, Cycle & Carriage. But demand is also dampened by another factor — full car loans are hard to come by from banks, with the ongoing credit crisis.
"Loan rejection rates are appalling — 30 to 40 per cent of the people (at our showrooms) could not get the full loans," said Mr Glenn Tan, group chief executive of Motor Image Enterprises, Subaru's regional distributor.
"So, I think that even with a bumper crop of people wanting to buying cars, the COEs have not gone to $10,000 or $15,000 because they cannot get loans."
COEs in the big cars, motorcycles and open categories also went up in yesterday's exercise. Prices for cars above 1,600cc rose from $4,889 to $6,501, while open category prices rose from $6,889 to $7,589. Motorcycle COEs rose slightly from $1,012 to $1,102. Only COEs in the goods vehicle and bus category fell, from $6,189 to $5,212.