COE trends
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unless got another recession, else i dun see COE dropping significantly anytime soon.
given the already crowded roads, govt is unlikely to change the formula for car ownership or allow a bigger increase each year. with COE (hence new cars prices) being so high, more existing car owners will continue driving old cars and not scrap them. With fewer scraps, there will be fewer COEs put back into the pool of new COEs available, so the number of COEs per month will not change.
Now the trend is every month will see more people wanting to buy new cars, than the number of COE available. As a result, demand more than supply so premium is sky high.
We assume demand is pretty constant (dynamics playing it out), so if supply doesn’t increase, premium should stay high. If there is recession, demand will likely decrease, and premium will drop.
During 2005-2009, the demand was not likely very different from now (again, the dynamics at play), but the supply was much higher then, so the same number of buyers each month had more COEs to bid, hence didn’t have to pay so much to succeed.
Until the COE numbers increase, or there is a recession, I think the premium will remain around there.
Oh, if govt changes rules again, to limit loan to 70% again, then demand might again go down…
So looks like i will have to drive my 06 car till 10 yr old… -
atrecord:
unless got another recession, else i dun see COE dropping significantly anytime soon.
given the already crowded roads, govt is unlikely to change the formula for car ownership or allow a bigger increase each year. with COE (hence new cars prices) being so high, more existing car owners will continue driving old cars and not scrap them. With fewer scraps, there will be fewer COEs put back into the pool of new COEs available, so the number of COEs per month will not change.
Now the trend is every month will see more people wanting to buy new cars, than the number of COE available. As a result, demand more than supply so premium is sky high.
We assume demand is pretty constant (dynamics playing it out), so if supply doesn't increase, premium should stay high. If there is recession, demand will likely decrease, and premium will drop.
During 2005-2009, the demand was not likely very different from now (again, the dynamics at play), but the supply was much higher then, so the same number of buyers each month had more COEs to bid, hence didn't have to pay so much to succeed.
Until the COE numbers increase, or there is a recession, I think the premium will remain around there.
Oh, if govt changes rules again, to limit loan to 70% again, then demand might again go down...
So looks like i will have to drive my 06 car till 10 yr old...
Hey bro, you driving a Stream or Toyota? Your nick is very familiar... Almost as if we did \"meet\" before...
Anyways, am quite confident that you should see a chance in about 3 years time, so get ready!
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MadScientist:
Yup, yours is familiar too
Hey bro, you driving a Stream or Toyota? Your nick is very familiar... Almost as if we did \"meet\" before...
Anyways, am quite confident that you should see a chance in about 3 years time, so get ready!
I drive a toyota wish.
Pls share where did you get the confidence from. If really so, then I'll get ready... car would be 8-9 yo then, just abt right time to explore...
tks. -
Ours 05 car… DH think is like govt maintain car quota, and then plus 1/3 to 1/2 of the boom years of 2003 - 2007 scrap cars, resulting more COE available then now… Seems that COE from scrap cars govt dun take back? They only increase or decrease the additional new COE? I abit blur…
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dicky:
Ours 05 car.... DH think is like govt maintain car quota, and then plus 1/3 to 1/2 of the boom years of 2003 - 2007 scrap cars, resulting more COE available then now.... Seems that COE from scrap cars govt dun take back? They only increase or decrease the additional new COE? I abit blur......
Err... what did you mean when you said \"resulting more COE available then now\"? Did you mean 'then' or 'now'?
Govt has this unique formula, where they allow car population to grow only a small percentage every year. Each COE lasts 10 yr. So in theory, if everybody loves their cars and hold it for 10 yr and not sell/scrap; then in the 11th yr, there will be maybe just a few COEs available every month.
The reason why all along there are a few hundreds/thousands of COEs per category per fortnight now (and in the last 10-20 yr) is because there are cars being sold and some scraped every year. Once they are scraped, the COE goes back to the govt pool, which per their formula, will be added to the no. of COEs up for bidding after i think 6 mth or 1 yr. So the more number of cars being scraped, the more COEs will be available 6-12 mths later. The converse is true too, obviously.
Back in the mid 90s, when COEs hit >$100K, owners will scrap cars once COE drops to, say, $40K (assume after 5 yr). When they do so, govt gives them back $50K for the balance of the COE unused. So with the $50K taken back, they can buy a new car - pocketing $10K and extending the lifespan of a car for another 5 yr in the process.
This was repeated during late 90s (when COE was $20-30K) to 2005 (when COE dropped to ~$10K), for the same reason. During those periods, people figured out there's no point holding on to an ageing car, so all scraped and changed. There is a 'vicious cycle' in play, as more people scrap means more COEs available, means COE premium drops further, means the cycle repeats (maybe the quantum becomes less drastic).
Now that the COE is on the upwards trend, owners will figure out that there is no point in changing to new cars (and it is v expensive), so will likely hold on to the ageing cars, resulting in less cars being scraped and therefore less COEs available, which in turn means premium sure soar, and the cycle too repeats... -
Just want to get some perspective.
I also heard that due to the high no. of COE issued at certain year, in 2-3 years time, there will be a higher availability of COE as some people decide to scrap their car when it's 10 yrs ago. By then the COE is expected to drop/ moderate. On the other hand, I am unsure if the government might change their formula and some of these \"scrapped cars\" COE are not recycled back into the system since the objective is to cap car population. :?
Personally, I don't think COE will fall back to the old level. In any case.... we're already committed already. Too late to think about it. -
Typically Singaporeans will think of changing cars earliest after 3 yrs, when the common warranty period of 3 yr is up.
The COE was at rock bottom during the last recession in 08/09. Hence those who bought cars at that time, when COE was less than $5K or $10K, would likely hold the cars till the end (for eg., the $101 COE for small car batch, all the cars were driven to the very end 2-3 mth ago).
COE started to hit $30K i think last year. Only when these batch of owners find it worthwhile to scrap in a few years down the road, will there be more scraps and therefore more going back to be recycled every month.
I think that will not happen until maybe 4-6 yr later…
Or maybe when LTA suddenly said they are going to tweak formula again to allow more growth, affecting (increasing) the supply and then trigger all the owners of high-COE cars to change cars in a repeat of the mid-2000s period. -
atrecord:
Yup, yours is familiar tooMadScientist:
Hey bro, you driving a Stream or Toyota? Your nick is very familiar... Almost as if we did \"meet\" before...
Anyways, am quite confident that you should see a chance in about 3 years time, so get ready! I drive a toyota wish.
Pls share where did you get the confidence from. If really so, then I'll get ready... car would be 8-9 yo then, just abt right time to explore...
tks.
That's right!
TWCSG!
I was about to buy a Wish at that time... then decided against it.
My confidence lies in the analysis I did from a number of angles. It is in my blog, listed in my profile.
Happy reading!
Cheers! -
MMM:
Just want to get some perspective.
I also heard that due to the high no. of COE issued at certain year, in 2-3 years time, there will be a higher availability of COE as some people decide to scrap their car when it's 10 yrs ago. By then the COE is expected to drop/ moderate. On the other hand, I am unsure if the government might change their formula and some of these \"scrapped cars\" COE are not recycled back into the system since the objective is to cap car population. :?
Personally, I don't think COE will fall back to the old level. In any case.... we're already committed already. Too late to think about it.
I stated before, that we would see a \"fair value\" of about $40K or above... reaching there soon.
However, I still think that there is an increasing chance of it getting to a low COE of 10-20K. It will happen... not now, not tomorrow, but that day is coming, given a set of criteria.
My analysis is in my http://trendspottingmadscientist.blogspot.com/2011/07/coe-trend-analysis-by-madscientist-july.html... -
MadScientist:
Interesting read. You're really thorough. I had only analysed the COE trends, when are owners likely to change cars, plus the economy. Didn't factor in taxi fleet changing and interest rates, etc.
That's right!
TWCSG!
I was about to buy a Wish at that time... then decided against it.
My confidence lies in the analysis I did from a number of angles. It is in my blog, listed in my profile.
Happy reading!
Cheers!
If COE is going to come down around 2015, then it is just the right time for me. Pray pray... But if the JPY is still going to be high then maybe will consider other makes...
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