At the start of 2016, analyst as well as forecasters for numerous car dealers has expected the COE prices for 2016 to drop significantly. This is due to the large amount of cars getting deregistered from the year 2006. In addition, the prices of COE has also followed the trend for the last two decades, with the prices of COE in 2006 going as low as $7000 for a category A car, using the older system which went by the capacity of your engines.
The prices of COE has indeed dropped quite a bit, from its peak at about $80000 to the price of about $46000 for a category A car. However, despite the significant amount of cars deregistered, the price doesn’t seem to be going down, why is that so?
The government in 2016 decided to initiate a car free environment, with various steps to reduce its’ carbon footprint, it might not be apparent but it feels like the government is slowly reducing the COE quotas, this is in addition to the increase of car park charges across Singapore’s public car parks as well as private car parks.
The other reason is because of car sharing/ taxi services such as grab and Uber. With cheap rental prices for cars, people are seeing a lesser need to own a car but instead rent a car to get about their lives. This way, individuals won’t have to deal with monthly maintenance and the yearly depreciation of cars which can cost $7000 minimally per year.
Outlook for upcoming months
Although the prices for COE has dropped quite significantly, there is an increasing amount of car owners that decided to extend their car’s life by 5 years. You can do this by paying half of the current COE’s prices. However do note that after that 5 years you won’t be able to get back any of OMV value. This situation has caused lesser deregistration which also means the new COE quota will be reduced proportionately. For the next three months, there will be a decrease of about 10% for new COEs across the board.
With the decrease of COE supplies, the prices should see a steady increase in the upcoming months. It may not be that noticeable and car dealers will probably maintain its car prices in order to entice potential car owners.
Should I continue to wait for prices to drop
It is highly unlikely that prices of COEs will drop to prices of 2006 of about $10000, as such, the prices are likely to maintain at this price for a couple of years to come. In fact, with the different initiatives the government is gunning for to make Singapore a carbon free city, it is likely that owning a car in the future might be even more difficult than it is now.
What car should i Buy with the lookout so grim?
With the prices of car expected to hover around the 90k-130k for majority of manufactures. It is important to choose the perfect car for your need. There are many exceptional cars that will be released end of year so it will be important to keep a watchful eye for the latest model car. Newer car models also tend to have a better resell market due to the demand in the future.
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