COE to go up, or down?
3 posts
Re: COE to go up, or down?
by nhyone » Sep 21st, '09, 8:48 pm
COE price will remain high in the short term for two reasons:
- more attractive OPC scheme
- fewer COE after October
Now, the better OPC scheme is supposed to entice people to switch from normal to OPC. However, it is not good enough to do so. On the other hand, it is very attractive for new car buyers -- especially people who seldom drive. Thus, short-term demand is high. (I'm sorry to say these folks don't really pay less. Whatever savings they might have will end up in the COE.)
We have seen this situation before. When PARF was reduced from 110% to 100%, COE price went up correspondingly for a short period.
Fewer COE after October should not affect the COE, but it will. Why is COE reduced? Because fewer people scrap their old cars. Thus, there is no corresponding demand for new cars. But new car buyers do not really understand this point and think lower supply automatically means higher COE. And when they all rush to buy, the short-term effect is that COE price goes up.
Again, we see this situation whenever the COE quota is reduced. It'll take a few months to clear the backlog.
- more attractive OPC scheme
- fewer COE after October
Now, the better OPC scheme is supposed to entice people to switch from normal to OPC. However, it is not good enough to do so. On the other hand, it is very attractive for new car buyers -- especially people who seldom drive. Thus, short-term demand is high. (I'm sorry to say these folks don't really pay less. Whatever savings they might have will end up in the COE.)
We have seen this situation before. When PARF was reduced from 110% to 100%, COE price went up correspondingly for a short period.
Fewer COE after October should not affect the COE, but it will. Why is COE reduced? Because fewer people scrap their old cars. Thus, there is no corresponding demand for new cars. But new car buyers do not really understand this point and think lower supply automatically means higher COE. And when they all rush to buy, the short-term effect is that COE price goes up.
Again, we see this situation whenever the COE quota is reduced. It'll take a few months to clear the backlog.
(void *) &NHY;
- nhyone
- Posts: 165
- Joined: Aug 2nd, '09, 4:28 pm
- Location: Singapore
3 posts