CERTIFICATE of entitlement (COE) prices for cars ended higher at the latest tender yesterday, with the sharpest spike posted by bigger cars.
The premium for cars up to 1,600cc and 130bhp closed 1.7 per cent higher at $65,710. That for cars above 1,600cc or 130bhp climbed 6.3 per cent to end at $72,990. The price for the Open category COE, which can be used for any vehicle type but ends up mostly for bigger cars, finished 5.5 per cent higher at $72,810.
All these premiums are now at their highest in four months.
Motor traders said demand whipped up by newly launched models as well as an overall shrinkage in supply of COEs for buyers of bigger cars fuelled the increase.
Mr Nicholas Wong, general manager of Honda agent Kah Motor, said: "For the current quota, there are more COEs for category B (cars above 1,600cc or 130bhp), but there is a big drop in the number of Open COEs.
"If you add up the two, there are still fewer COEs available to buyers of big cars."
He also pointed to more cars reaching their statutory lifespan of 10 years. Owners typically book a new car before the old one is scrapped. Hence there is a lag before scrapped vehicles' COEs are converted back to fresh COEs - something the Land Transport Authority tried to address when it changed the way it determined COE supply in 1999.
Instead of basing supply on past deregistrations, it switched to a formula that used projected deregistrations, which it said was "more responsive".
But in 2010, it reverted to the past deregistration method, along with shortening the time between quotas. Again, it said this was more responsive.
Neither addresses the fluctuations in COE prices, according to industry watchers, who have suggested a flattened COE supply to minimise the ups and downs.
Meanwhile, the COE price for commercial vehicles fell 3 per cent to close at $52,390 yesterday. The motorbike COE premium was little changed at $4,354.