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COE prices might spike before CNY

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COE prices have just dropped, but it doesn’t mean that trend will continue

Singapore - Certificate of Entitlement (COE) prices have closed lower in the latest round of bidding.

It echoes the market sentiment that with de-registrations increasing, especially for 2015 and beyond, that COE quotas will go up and prices, accordingly, will fall.

But that may not happen, as we explored in a related story on why COE prices might actually never be ‘cheap’ (a relative term of course) again.

While the latest round’s prices were indeed lower, the magnitude of the price falls weren’t particularly big and they arrive on the back of a series of consecutive price increases and November itself also saw unexpected price bumps.

In the short term, there are two good reasons why COE prices will be on the up. The first is the traditional pre-CNY rush for new cars, when people are presumably buying new machines to match their new clothes.

The second is the return of the Singapore Motor Show after a six-year break. Brand representation is healthy this time round with more than 15 brands in attendance.

While some will be debuting new cars, the consensus within the industry is that dealers will use the show primarily as a chance to boost sales - much like IT fairs Comex or Sitex.

When that sort of ‘discount war’ happens, consumers will be happy to cash in on bargains, but the direct result of that would be a glut of orders and a COE price rise in the following round or rounds.