COE premiums are continuing to rise after having remained relatively stable last year.
At the same time, the number of COE renewals has hit a record high.
Many current car owners want to keep their vehicles longer instead of buying new cars.
So, new car demand from private customers has remained soft.
Meanwhile, car rental firms doing business with private-hire companies are increasing their fleet sizes.
This fuels demand for COEs and drives their prices up, thus pricing out buyers who genuinely need a car.
So what should potential new car buyers do?
According to Straits Times Senior Correspondent Christopher Tan:
ComfortDelGro-owned vehicle inspection centre Vicom highlighted in its first-quarter results last week that it expects business to accelerate.
This is on account of a record 37,000 old private cars having had their COEs extended last year.
These older cars are subjected to mandatory annual inspections.
The non-vehicle testing business is expected to remain challenging because of the slowing Singapore economy, Vicom added.
Two things car buyers can glean from that business outlook:
One, the COE renewal trend has showed no signs of slowing.
Indeed, first-quarter figures from the Land Transport Authority showed 17,428 car COEs were revalidated from January to March this year.
That figure is three times the number in the corresponding period last year.
Two, the economy is losing steam.
What does this mean for COE prices?
Well, even if the first factor is likely to lead to fewer fresh COEs available this year, the second factor should temper bidding.
On balance, COE premiums should not fluctuate much.
In fact, replacement demand should dip as more people hold on to their existing cars.
In other words, there is no need to give in to panic buying.