While certificate of entitlement (COE) prices for big cars took a huge tumble at the close of yesterday’s tender, auto dealers said it will not be feasible to slash showroom prices by the same quantum.
This is because they expect premiums to rebound in the month’s second bidding, and they want to deliver on their buyers’ orders.
Yesterday, COE prices for Category B – for cars above 1,600cc or 130bhp – dipped to a six-year low of $38,610, falling 23 per cent from $50,089 two weeks ago.
In Category A – for cars up to 1,600cc and 130bhp – the premium fell to $46,651, down from $51,301.
Mr Nicholas Wong, general manager of authorised Honda agent Kah Motor, said he was cutting the prices for Category B cars by between $5,000 and $9,000.
For example, the Honda Odyssey will now have a starting price of $137,000, instead of $142,000 previously.
Mr Wong said: “Nobody can predict the COE – a customer says he is only willing to pay for a $38,000 COE, (which) may or may not happen again… If it doesn’t, he won’t get his car and he’ll have to wait. We are pricing it at a level at which we are confident we can get a car for him.”
However, Mr Wong said Kah will offer a $42,000 COE rebate in the Honda Odyssey deal, which means that should the COE price remain at $38,000, customers will get the difference of $4,000 back, he said.
Nissan agent Tan Chong Motor said it was reducing the prices of Category A and B cars by “$5,000 to $6,000”. For example, the Nissan Teana is now $121,988, down from $127,988 previously, while the Nissan Qashqai 1.2 is $106,988, down from $111,988.
The firm’s general manager, Mr Ron Lim, said slashing by the same quantum as Category B’s drop would be “not realistic”, as the premium would rebound. “It’s the same when Cat A dropped by around $10,000 last month, prices were cut by around $5,000,” Mr Lim added.
But Kia agent Cycle & Carriage is reducing prices more in tandem with the COE tumble.
In Category B, the Kia Carens will be priced at $99,000, down from $109,000, while the Kia Optima is now $112,000, down from $122,000.
For small cars, the Kia Forte K3 is $86,000, down from $90,000.
Mr Eddie Loo, managing director of CarTimes Automobile, said that while bigger cars attract higher road tax and consume more petrol compared with smaller models, yesterday’s drop in COE prices for larger cars could see an increased interest from buyers.
This could cause Category B prices to inch up.
But Mr Loo added: “Many owners are scrapping their cars and looking for new ones, (so) market demand is there.
“However, the economy has been volatile, and there are many things to consider when buying a car, more than just the COE price.”
This article was first published on February 4, 2016.
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