Only 5 Months old. Like Showroom Condition Sep 2011 from Performance Motors Warranty from Agent. 

Why buy new when you can save S$60K from a 4 month old car.

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Before I answered these questions, lets us do a short review of the COE history over the past few years. In the late 90s, when COEs hit a high of $100000 before it dropped in 2000s, many are used to the high COE premiums. No one has complained as many enjoyed the bullish run in stock markets and in the property market. Our economy then was enjoying a double digit growth rate.
In 2002, LTA changes the scrap value situation where the drop from 80% of the parf value was changed to 65% of the OMV, this let to many deregistering their vehicles to take advantages of the high Parf value.

Then in 2004/5 period, again OMV is reduced to 55%, the market trend was focused on car owners scrapping the older cars in exchange for a brand new vehicles. The scrap car dealers were enjoying profitability for their business given the young age of the cars deregistering and the low mileage on the vehicles, the export markets was doing very well. This led to increase in opening EPZ (Export Processing Zone) where scrap dealers could keep the cars without paying high price on storing in PSA before exporting of vehicles. This also led to illegal smuggling of scrap vehicles to neighbouring countries.

Prior to the general election in 2006/7 period, government further reduced the scrap value of motor vehicle to 50% of OMV. During these periods, the new car division of both the authorized agents as well as parallel importers enjoyed good business and being a small market in Singapore, it led to fierce competition. In order to survive in the market, many importers have to undercut by having declare lower OMV. Lower OMV means lesser taxes payable and means consumers enjoying a lower car price upfront and losing the benefit of lower OMV values when times to scraping. From the new owner point of view then, the upfront lower payment is far more important than the cost of lower scrap values then as many knew they won’t be driving till scrap. Furthermore, the new car owners also know if in the event of their cars being caught for under declare OMV, they could enjoy the benefits of higher OMV as the fine and penalty are paid by the importers. The second cars dealers on the other hand suffered a bear situation for many years. Many have either shut their doors or changed to brand new car dealer or parallel importers.

Then the economic crisis happened in late 2008 till 2009. It was a wakeup call for many car owners. During the crisis, both the new car division as well as scrap cars dealers suffered. For the first time in decade, many suffered losses and in the same period, government catching firms for under declare of OMV and led to many closures and wind up of PIs and many authorized dealers have also changed owners and names. This was a turning point for the second motor dealers. Yes, the COE then was as cheap as S$20 but are there any buyers then? Property market was in a slump situation, uncertainity economic situation in US, many financial institutions in US such as AIG, banks faces closure and bankruptcy situation, many are caught in the bad economic situation and with heavy leverage in loans (both cars and property markets), and economic was bad.

With the US government and many countries government cleaning up their economy situation in mid 2009 and in early 2010, economy was back into the healthy state. The property market was back in its bullish state and stock markets hitting all time high. With the recent announcement in December 2010 by government in 2011, the COE has hit rocket high just like the stock index and property prices.

In 2011, what is the likelihood of COE prices?
• Should buyers buy new or used or used imported or
• just keep the vehicles or
• just sit on the wall and wait see situation?

The following is a brief analysis and some inputs from my personal view. As said earlier, property prices has hit all time high and the stock index has surpassed the pre-crisis level, COE has hit in S$70000k++ in late 2010 before slight downward movement in the first COE bidding in 2011, is our COE going up or maintained or will it dipped downwards? Yes, as compared to pre-crisis situation, COE has increased more than three folds already. But in comparison to 1997 situation, when COE hit more than S$100K it is relatively lower than that level. Will COE reached the 1997 level of S$100K or more? This is the likelihood question many raised. Below is my short analysis based on my experiences.

2011 is the year of general election in SINGAPORE. I believed the government will call for election by mid June 2011. The economy of Singapore is enjoying a robust movement. Property prices are doing well. Stock market even the housewives are making money from the stocks they invested. Given all the favourable situations, the likelihood of election would probably be after Chinese New Year as the current ruling party is likelihood to take advantages of the bull run to hold elections. From the past decades of election, it is noticeable that before the election, the government would give out incentives, candies and “sugar” to win votes. This is the common tactics by the government. The common citizens now are now complaining the COE prices too high and many young couples are holding back on their marriages due to unaffordability in getting a shelter over their heads. The rich are getting richer and the gap between the rich and poor are widening. In the meantime, the bank loans are getting bigger due to larger loans in motor vehicles as well as in property market.

To prevent the history of 2008 prior to the crisis and to take advantages of the robust economy, the ruling government is likelihood to implement tools to cool off the property market and the COE prices.
Will COE reach the level of S$100k in the near future? The likelihood is yes unless a general election is coming soon. In the meantime, the COE for Cat A will maintained between S$30000 to S$40000 plus and remains stable as for the Cat B where the rich and wealthy households will probably rise to S$80000 or even more as they are making tons of money from the property and stock markets. To the rich, even an increase of S$10000 or S$20000 is nothing in comparison to their profits made on the short term stock markets as well as the bull run on the property market. On the other hand, the government will not allow the property market or stock market to crash overnight when it introduces measures or new policies. The likelihood of policies imposed would only soften and cool off the over-heated economy as well as to cool off the high rise in COE prices.

The other impact on the stock market and property market would be the EU economy. Many are aware of the trouble and bad situation in EU and feared it may worsen to UK and repeat the history again back in 2008. If the government of these countries does not resolve the situation or stimulate the economy, our economy may be affected and resulting in stock markets on the tumbling movement and the in turns the property market and economy on bear run and eventually the send the COE on a sharp downward movement.

So what’s the best situation right now? Buy used cars. The exploding COE premiums will also see the explosion of the second-hand car market as those intending to buy brand new vehicles will naturally turn to pre-owned cars.
If COE premiums remains buoyant, there’s also a pretty good chance for the fairly new cars on the market for sale. For those who can afford them especially the rich will operate on the concept on “buy high sell high” principle which they are operating on the stock and property market.

This is my personal recommendation. If you are sitting on the fence and not in a hurry to purchase any vehicle, let’s not spoil the overheated COE situation and fight with those wanting to buy cars and causing car prices shooting upwards. Wait for the election and see what goodies government giving out as well as watching for EU countries (their economy situation) before deciding when to enter the market to purchase the vehicles.

For those practicing “buy high, sell high” rich and wealthy people, they could speculate the car markets like the way they speculate the stock markets and property markets by “gambling” on the car prices by selling off the vehicles and wait see situation as they have more than ample cars parked at their home garage.

For those whose can’t wait and needed a car, think what they really need before deciding what car to buy. Fuel prices have shot up already. They have to bear the interest involved in purchasing the vehicles. Even thou the rule 78 imposed has been withdrawn by many financial institutions, there is still a penalty charge imposed for early settlement.

Still have problems looking for the right car or timing to get car? Or don’t know whether a good time to sell off car? Just call Simply Cars at 6100 8070 or send us an enquiry at www.simplycars.com.sg or wanting to sell your car at higher price we will post for you and market the car for you. It’s simple and its free. Just a ring at 6100 8070, a simple step and we will be there for you. We offered you free consultation.