COE premiums ended lower across the board in the latest tender yesterday, with the rate for bigger cars posting the sharpest fall.

Market watchers attributed the softer prices to the seasonal lull of the school holidays, when people tend to be out of town.

There was also speculation that, with fuel prices hitting record highs, buyers may be starting to steer towards smaller and more economical cars.

The certificate of entitlement (COE) price for cars with engines up to 1,600cc, such as the Nissan Latio and Toyota Vios, ended 7.1 per cent lower at $14,590. The premium for cars above 1,600cc, such as the newly launched Audi A4 and Honda Accord, registered a 14.5 per cent drop to $14,640.

The price of the open category COE, which can be used for any vehicle type but ends up mainly for cars, dipped 2.4 per cent to $16,301.

The demand for commercial vehicles seemed to have cooled as well. The COE premium in this category closed 8.5 per cent lower at $13,501. Even the motorcycle COE rate was weaker at $1,083 - down 2.3 per cent.

Mr Barry Kan, general manager at multi-brand agency Wearnes Automotive, said: ‘I put it down to people being away for the school holidays. Generally, showroom traffic has been lighter lately.’

He said high pump prices, with a litre of petrol going for as much as $2.30, may be starting to hurt buyers of bigger cars - not so much the luxury-car buyers, but those eyeing the value-for-money models of Asian brands.

Mr A.C. Neo, marketing director of Nissan agent Tan Chong Motors, reckoned that the weak sentiment in the property, rental and stock markets was to blame for curtailing the demand for ‘more expensive items’.

Other observers noted that parallel importers have been less active in recent weeks, hence easing the pressure on premiums. Parallel importers are seen as being more aggressive COE bidders because they sell far fewer cars than authorised agents, and have less to lose if premiums soar.

Motor traders are expected to lower car prices on the back of the lower COE premiums.

By Christopher Tan, Senior Correspondent
Source : Straits Times - Thursday 5 June 2008