SINGAPORE — Following sharp rises in the last few bidding exercises, Certificate of Entitlement (COE) premiums fell across the board at the end of the latest exercise yesterday, catching industry players by surprise.

Premiums for Category B and E had crossed the S$90,000-mark in the previous bidding exercise, following the Land Transport Authority’s (LTA) move last month to implement engine power caps on top of the current restrictions on engine capacities for smaller cars starting next February.

However, bidding appeared to be conducted more cautiously in yesterday’s exercise, with prices starting to rise only after 3.30pm. Premiums in Category A (1,600cc and below) and B (1,601cc and above) hovered in the S$60,000 range before jumping steeply in the minutes before the exercise closed at 4pm.

In the end, Category A premiums dropped by 9.54 per cent to S$76,889, from S$85,000 in the previous exercise. Category B premiums dipped by 5.98 per cent to close at S$87,910. A smaller decrease was seen in the Open category, where COEs can be used for any vehicle type but are usually used for cars, with the premium falling 1.7 per cent to S$92,289.

The premium for commercial vehicles ended its record-breaking surge, falling 10.89 per cent to S$68,002, while the premium for two-wheelers fell 8.01 per cent to S$1,804.

Speaking in Parliament on Monday, Transport Minister Lui Tuck Yew had said that the Government has no plans to introduce additional cooling measures on COE prices “in the foreseeable future”, noting that despite recent increases, premiums “generally stayed below their peak level prior to the introduction of the restrictions” by the Monetary Authority of Singapore in February.

Motor traders attributed yesterday’s dive in premiums to lacklustre sales in the past two weeks, as well as uncertainty in the economy brought on by the partial US government shutdown.

Singapore Vehicle Traders Association’s Honorary Secretary Raymond Tang said the premiums for commercial vehicles likely tempered as “buyers may have found that a S$76,000 COE is too overpriced”.

Mr Ron Lim, General Manager of Nissan Agent Tan Chong Motor, had been expecting premiums to fall but was surprised by the “swiftness and magnitude of the correction”.

Managing Director of Car Times Automobile Eddie Loo said customers were probably “put off by the S$90,000 COE premiums”. However, he felt that the slump could be a “one-off knee-jerk reaction” and customers, lured by lower prices, would likely return. “Also, the competition among distributors will start in December, when everyone will be fighting to meet their sales quotas,” he added.

Both dealers also noted that premiums for big cars could increase in the coming exercises, with luxury car distributors launching new models such as the new Mercedes S-Class.

Said Mr Lim: “For buyers in that segment, money is not a problem. They probably just want the car fast before Chinese New Year, so if dealers can secure the COE premiums fast, they can fulfil their deliveries.”