Beating the Car COE System

Yesterday, everyone watched with keen interest the car COE prices as this was the first COE bidding session after the restrictions in car loan and increases in car taxes were announced.

Before I go into a hypothetical discussion of how we can beat the COE system, here are the figures for March’s results:

 

Category Quota QP($) PQP($)
A CAR (1600CC & BELOW) 336 74,689
B CAR (ABOVE 1600CC) 326 58,090
C GOODS VEHICLE & BUS 225 53,900
D MOTORCYCLE 510 1,895
E OPEN 255 65,001
QP: Quota Premium
PQP: Prevailing Quota Premium
Category Received Successful Unsuccessful Unused
A CAR (1600CC & BELOW) 1,180 329 851 7
B CAR (ABOVE 1600CC) 1,028 326 702 0
C GOODS VEHICLE & BUS 374 223 151 2
D MOTORCYCLE 669 510 159 0
E OPEN 1,036 248 788 7

For cars above 1,600c, there was a big drop of S$34,000 from the previous price of $92,667.

Prices for the Open COE also fell sharply to $65,001, down over S$26,000 from $91,910.

In contrast, COE for cars up to 1,600cc finished at $74,689, down only slightly from $78,301.

So overall, the recent measures seemed to have done the trick, lowering the demand and COE prices.

But wait.

A look at the numbers for the previous bidding exercise showed that the number of bids in the car categories have actually doubled this time round. Each category attracted almost 1000 bids.

 

Quota

Quota Premium

Total Bids Received

Number of Successful Bids

Unused Quota carried forward

NON-TRANSFERABLE CATEGORIES
Category A (Cars 1,600cc and below)

333

$78,301

427

329

4

Category B (Cars 1,601cc and above)

303

$92,667

409

299

4

Category D (Motorcycles)

506

$1,512

589

469

37

It appears that demand has actually increased. What actually happened?

I suspect that the number of opportunist bidders has increased as some people were expecting a huge drop in the COE prices.

For example, I know of one friend who went to try his luck and put in a bid of $100.

But overall, the prices still went down as the car dealers were more cautious with their bids. We all know that they are the ones that “move” the prices.

So how can we beat this COE system?

I draw my inspiration from an article that I read recently:

Students get class-wide As by boycotting test, solving Prisoner’s Dilemma

If everyone puts in a bid at the same price (say $1 or $100), how will LTA award the COE?

They might end up having to ballot or use a first-come-first-served system (The latter system could already be the method employed).

Those who manage to secure the COE will be able to do so at a much lower price compared to competitive bidding. With lower COE prices, cars will become more affordable and business at the car dealers might pick up.

Everyone wins at the expense of the government, who will collect significantly less revenue from the COE, and they will be forced to revise the COE system in double quick time. :)

Practically, I think it would probably be almost impossible to achieve this. If anyone tries to organize this, it could even be construed as price fixing (a very weird type of price fixing) and deemed to be illegal.

Comments

  1. James says

    Hi Lion,

    I always think that the COE tendering system is basically flawed. They should let bidders paid the amount they bid. Any land bidding and allocation is done that way, so why draw an artificial line on the “successful” biding price.

    Paying the amount you bid will help bidders to be cautious and drive the COE price to more rational level. Also, the car loan and insurance should not cover the COE component of the car.

    • says

      Hi James,

      Agreed with you and I think that would be one good way.

      Can also consider a requirement of paying in cash upfront when you put in the bids.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>


Notify me of followup comments via e-mail. You can also subscribe without commenting.