COE quota to be determined every 3 months from February

The Certificate of Entitlement (COE) system has been refined to make it more responsive to de-registrations.

The Land Transport Authority (LTA) said that from February, it will announce the COE quotas every three months instead of the current six months.

This will enable a more accurate and prompt matching of the number of new COEs to be issued to replace de-registered vehicles, it added.

Vehicle de-registration has been rising in recent months as more vehicles reach 10 years of age. This trend is likely to continue until 2016.

The Land Transport Authority said the move to reduce the quota period is timely as a three-month recycling period would be more responsive than a six-month system.

With the change, the total COE quota for the period from February to April 2014 will be 9,127.

This translates to a monthly COE quota of about 3,043 for all categories combined, about five per cent higher compared to the 2,884 monthly quota that would have been allocated under the current system.

For example, for Category A, under the three-monthly recycling period, the quota would be 717, compared to 671 if it were under the six-monthly recycling period.

For Category B, the new quota would be 701 as opposed to 663.

For Category C, it would be 524 for the quarterly recycling quota, but 483 under the present system.

For Category D, the new quota would be 719, up from the present system's quota of 703.

And for Category E, the new quota would be 382, up from 364 under the present system.

However, when the monthly quota for February 2014 to April 2014 is compared with the monthly quota for August 2013 to January 2014, there would be fewer COEs.

In total, there were 3,471 COEs from August 2013 to January 2014 compared to the new quota of 3,043.

Bidding under the new quota will start with the first open bidding exercise in February.

LTA announced the change to motor traders in a meeting on Monday.

The last time the COE quota methodology was changed was in 2010. The quota period then was shortened to six months from a year.

Industry players have suggested shortening this period further during public consultation sessions with LTA last year.

They welcomed the change, saying it is another step in stabilising COE prices.

Glenn Tan, president of the Motor Traders Association of Singapore, said: "Hope this is not a piecemeal kind of change, and something that would lead to a future stabilisation of the COE system, and also to make the supply more stable throughout the 10-year cycle, as opposed to a peak and a trough system."

Neo Tiam Ting, president of the Singapore Vehicle Traders Association, said: "LTA is trying to cool down the COE (prices) like previously the loan curb.

"But if LTA can think of the other way -- if they know that in 2015, 2016 the de-registration will be more, if they can 'borrow' from 2015 and 2016 for this year to use, I think it will be a better way to stabilise the COEs."

But motorists have mixed views on the latest tweak to the COE system.

"I believe the COE will not be significantly different, perhaps by then it's cheaper by S$5,000. But if I would like to change car now, I would prefer to change the car now, rather than wait for a S$5,000-6,000 decrease," said motorist Ng Chiau Hung.

Danny Thien, a potential car buyer, said: "With the latest news, I will definitely wait and see until the prices stabilise more. With the latest measures, it will definitely have an impact on the number of COEs released, and hopefully the car prices will continue to come down."

However, one transport analyst cautioned that COE prices may still continue to climb.

Professor Ivan Png from the Department of Information Systems at the National University of Singapore, said: "In a climate where de-registrations are falling and we reduce the lag between de-registrations and the future COE supply, then what's going to happen is the COE quota is going to be lower than it would have been otherwise.

"So if we look forward in the future and there will come a time when de-registrations start to fall then this new policy of reducing the lag will have the effect of making fewer COEs available and therefore COE premiums will be higher."

Besides replacement COEs for vehicles de-registered, the supply of COEs is also calculated on the provision for 0.5 per cent per annum vehicle growth and adjustments for changes in the taxi population.

The next announcement of COE quotas will be in April.