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Old 14th January 2014, 07:42 AM   #1 (permalink)
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LTA announces shorter three-month COE recycling periods, COE quotas also set to drop

LTA announces shorter three-month COE recycling periods, COE quotas also set to drop


A long line of vehicles wait for the green light at a traffic junction in Singapore, 22 October 2004. Photo by …

By Choo Yi Hung | Yahoo Newsroom


Certificate of Entitlement (COE) quotas will be announced every three months instead of six, said the Land Transport Authority on Monday.

This was done with the aim of making the supply of COEs more responsive to the market and de-registrations, it said. It had contemplated quarterly-recycling periods as early as 2010, but felt that such a change would be too drastic.

In its update, LTA also said there will be 717 COEs a month for cars up to 1,600cc and 130bhp – fewer than the previous monthly supply -- for the quota period February to April this year.

For Open COEs, which can be used for any vehicle type but ends up mainly for bigger cars, supply will drop sharply from 522 to 382 a month.

In total, 9,127 COEs will be issued for the period of February to April.

Latest COE prices announced last week ranged between S$70,000 to S$80,000 for small and big cars.

Source: http://sg.news.yahoo.com/hd--lta-ann...082703398.html

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Old 15th January 2014, 06:31 PM   #2 (permalink)
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Re: LTA announces shorter three-month COE recycling periods, COE quotas also set to drop

Lets see if the prices will drop too as well.

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Old 17th January 2014, 09:12 AM   #3 (permalink)
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Latest COE tweak may be more bane than boon

Latest COE tweak may be more bane than boon

Friday, Jan 17, 2014
Christopher Tan
The Straits Times


A car certificate of entitlement (COE) allocation period based on three months instead of six has mitigated a supply crunch in its maiden quota period from February to April.

Slightly more COEs will be issued than would have been with the old method, to replace the greater number of cars that were deregistered in the last three months than in the last six.

The move, announced by the Land Transport Authority on Monday, was to make the system "more responsive" to market changes than the previous six-monthly method.

But greater responsiveness could also spark that bane of buyers and sellers: sharper price swings.

In the first case, though more COEs will be available in the next quarter, premiums are likely to remain firm, or rise on the whole, as car buyers will still face a 10 per cent cut in what is already a record-low supply.

Those buying smaller and less powerful cars may see a dip in prices (because a number of premium brands with powerful engines will exit this segment from next month), but this is unlikely to trigger a buying frenzy.

For that to happen, there needs to be a $20,000 to $40,000 drop in prices for more buyers to be able to afford a new car under new financing rules.

For instance, a new Toyota Corolla Altis costs $132,000 today. If premiums softened by $10,000, it would cost $122,000 - which still requires a down payment of $48,800.

That is still a tidy sum, which means only owners of relatively newish cars can switch, as they could fetch a decent resale price for their vehicles.

Those with older cars - say, eight years or more - would be unlikely to attract resale prices high enough to offset the downpayment. Similar dynamics apply to bigger, costlier cars.

So because owners will hang on to their older vehicles, and five- to seven-year-old second-hand cars will remain in demand, there will be fewer cars scrapped - leading to fewer COEs issued in the next quarter.

The shrinkage will be starker because the system will now follow a three-month cycle, instead of six.

In the latter half of the year, deregistrations will accelerate, as many owners who have to scrap their cars at the end of their statutory 10-year lifespans this year will wait till the last possible moment to do so, given the prevailing high prices.

If it had been a six-monthly allocation system, there would be a higher chance for the events above to even out.

In short, prices on the whole will rise before easing in the latter part of the year.

NUS Business School associate professor of business analytics Chu Sing Fat said a three-month allocation method is not a long-term solution, noting: "A more stable solution is to make the supply of COEs less dependent on short-term deregistrations."

This could be done by setting aside "reserves" during high-supply years to be released in more "meagre" years.

In other words, flattening the peak-and-trough supply pattern that has resulted in wild price fluctuations since the COE system started in 1990.

Experts and industry players said a proper review of the COE system should address how supply is determined.

Over the years, the LTA has sought to fix a persistent supply-demand mismatch. In the beginning, quotas hinged on deregistrations of the past 12 months.

Then, the system moved to forecasting, where annual COE supply was determined by the number of vehicles expected to be taken off the road in the current year. Next, the LTA reverted to the first method, but shortened the allocation period to six months.

Still, premiums see-sawed.

COE fluctuations in turn influenced deregistration patterns: High COE prices followed by a season of low premiums accelerated deregistrations. Low COE prices followed by a spell of high premiums resulted in constipated deregistrations.

Soon, the tail began to wag the dog.

The LTA may have missed an opportunity on Monday in its latest attempt to fix the perennial mismatch to delink COE supply from deregistrations, and pave the way for a smoother supply pattern and consequently, smaller price fluctuations.

Also, it could have easily postponed a clawback of oversupplied COEs to 2016, when the next supply boom is due.

But it is also quite clear that improving the COE system - which still functions to cap the vehicle population - is not on top of the authority's "to-do" list.

Instead its priority is to move more people to public transport.

For the first time since the start of the COE system, public transport usage share rose in 2012 after periods of decline. It hit 63 per cent, up from 59 per cent in 2008.

The targets are 70 per cent by 2020, and 75 per cent by 2030. Weaning people off cars is part and parcel of a strategy to reaching those goals.

Source: http://ride.asiaone.com/news/general...more-bane-boon

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