Sunday, November 21, 2010
Wednesday, November 3, 2010
Singapore COE prediction
I'm staking my claim! The COE is heading north till late 2014 or maybe mid 2015.
There are a confluence of factors that feed my claim. At this point i'd have to readily admit that its based on a feel and a couple of mental sums but where it lacks in hard quantitative science i hope to make up for it in convincing logic
So here goes, My feel is that the COE will rise till about mid 2015 and things should ease off from there till about 2019. This is based largely on the absence of cars from certain periods in COE history that will create flat spots in the market.
The 2011 cars.
For the last few years, cars registered around 1991 with COE renewals up to 2011 have been the staple of the COE market. These were 20 year old cars purchased during opportune low COE time and renewed during the days of $101 COE in 2001. The situation as we speak now is bleak for cars in this segment as with COE's in an all time high renewing these 20 year old cars will be something you'd have to think about very seriously about. Perhaps a few special cars will survive the 2011 COE but many who missed the boat of the march 2009 PQP of $3000+ will effectively see this segment of cars dissappear. Thus from 2011 onwards there will be no more circa 1991 cars.
1996-2004
between the years of 1996 to 2004 we see practically no more mid to low end cars on the market. In fact as of today, if you do a search for cars registered in the year 2000 on SGCARMART, you'll find less than 10. Of the lot, none are mid to low end cars like corollas, Civics and the like. Its the premium brands that live here. During this period we saw various COE spikes and high ARF values that encouraged people to scrap their cars when their financing broke even to 'upgrade' to a new car with similar bank repayments. The problem with the COE escalation that we will see till 2014 is that because the '96-'04 cars are missing and with the death of 2011 cars, there will effectively be very very little used cars on the market. Thus increasing the pressure onto the new car market and thus overheating the COE market. Even if the government relaxed the zero car growth policy, the pure demand will certainly outstrip the supply.
2005 onwards
Repreive I feel will come in 2015 when the 2005 cars will mature to a nice age of 10 and consider a 10 year PQP to fill in the demand for the vehicle shortage. That too should cool the COE prices down as owners will have more options. Its unlikely we will see further scrapping of 2005 and onwards cars as they were purchased relatively cheaply, and it may not be equitable for them to upgrade during the years of 2011-2014 as the COE (according to my prediction) will be through the roof...
So how high?
As I speak today, the big cc car COE is around $45,000. If the market looks good and no further adjustments are done by the LTA and no SARS or Swine flu outbreak to shatter market sentiment... we will hopefully see no more than $60,000. Some feel $100,000.
So lets see......
There are a confluence of factors that feed my claim. At this point i'd have to readily admit that its based on a feel and a couple of mental sums but where it lacks in hard quantitative science i hope to make up for it in convincing logic
So here goes, My feel is that the COE will rise till about mid 2015 and things should ease off from there till about 2019. This is based largely on the absence of cars from certain periods in COE history that will create flat spots in the market.
The 2011 cars.
For the last few years, cars registered around 1991 with COE renewals up to 2011 have been the staple of the COE market. These were 20 year old cars purchased during opportune low COE time and renewed during the days of $101 COE in 2001. The situation as we speak now is bleak for cars in this segment as with COE's in an all time high renewing these 20 year old cars will be something you'd have to think about very seriously about. Perhaps a few special cars will survive the 2011 COE but many who missed the boat of the march 2009 PQP of $3000+ will effectively see this segment of cars dissappear. Thus from 2011 onwards there will be no more circa 1991 cars.
1996-2004
between the years of 1996 to 2004 we see practically no more mid to low end cars on the market. In fact as of today, if you do a search for cars registered in the year 2000 on SGCARMART, you'll find less than 10. Of the lot, none are mid to low end cars like corollas, Civics and the like. Its the premium brands that live here. During this period we saw various COE spikes and high ARF values that encouraged people to scrap their cars when their financing broke even to 'upgrade' to a new car with similar bank repayments. The problem with the COE escalation that we will see till 2014 is that because the '96-'04 cars are missing and with the death of 2011 cars, there will effectively be very very little used cars on the market. Thus increasing the pressure onto the new car market and thus overheating the COE market. Even if the government relaxed the zero car growth policy, the pure demand will certainly outstrip the supply.
2005 onwards
Repreive I feel will come in 2015 when the 2005 cars will mature to a nice age of 10 and consider a 10 year PQP to fill in the demand for the vehicle shortage. That too should cool the COE prices down as owners will have more options. Its unlikely we will see further scrapping of 2005 and onwards cars as they were purchased relatively cheaply, and it may not be equitable for them to upgrade during the years of 2011-2014 as the COE (according to my prediction) will be through the roof...
So how high?
As I speak today, the big cc car COE is around $45,000. If the market looks good and no further adjustments are done by the LTA and no SARS or Swine flu outbreak to shatter market sentiment... we will hopefully see no more than $60,000. Some feel $100,000.
So lets see......
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