SINGAPORE: Certificate of Entitlement (COE) premiums closed sharply lower in most categories on Wednesday, in May's first open bidding exercise.
This comes after an increase in the quota of COEs made available.
The biggest drop was seen in the small car category, down by S$11,333 or 15.8 per cent, to S$60,002.
In the Open category, the COE price dropped S$8,309 to S$65,501.
For big cars, premiums fell S$5,008, or 6.7 per cent, to end at S$70,002.
Commercial vehicles (Category C) is the only category to see a rise of S$3,411 to S$36,301.
Premiums for motorcycles slipped S$501, or 11.1 per cent, to S$4,001.
Car dealers attributed the lower premiums to a response to the 32 per cent increase in the supply of COEs for the next three months.
More than 4,000 COEs will be made available for bidding each month. The number of COEs is largely determined by the number of vehicles scrapped in the previous months.
Mr Jeffrey Cheong, a committee member of the Motor Traders Association of Singapore, said: "The drop in the COE was because of the anticipated increase in the COE quota that the government announced from May onwards.
"So, I believe that a number of customers were holding back, just waiting for the COE to drop further. So, this is the first round of the new quota, and we're just seeing this drop for the time being."
With the drop in COE prices, motor traders said demand may go up, as consumers are expected to be more ready to make a purchase.
However, industry players do not expect COE prices to continue to fall.
Mr Victor Kwan, managing director of Volvo, said: "There are a lot of people who need to buy cars, and we have seen in the last two weeks, demand is strong, showrooms are getting crowded again.
"Yes, there are more COEs available, but demand is also strong, and there are a lot of people scrapping their cars, so a lot of people need to buy their cars, and I don't think it will drop much more from the level as it is now. In fact, right from the next bidding, COE might bounce back a little bit."
The lower premiums and increased demand will likely also see dealers pricing their cars more aggressively. - CNA/de
MORE SINGAPORE NEWS
Latest Photo Galleries on xinmsn
Rebel-held villages on the frontline of the war between pro-Russian separatists and government forces in eastern Ukraine face a barrage of s... More Rebel-held villages on the frontline of the war between pro-Russian separatists and government forces in eastern Ukraine face a barrage of shelling despite the ceasefire, as desperate locals say they have nowhere else to go. Duration: 02:22
Date 9 mins ago, Duration 2:22, Views 0