Look Ahead 2024: COE premiums set to moderate amid supply bump, but ride-hailing costs may rise
Source: TODAY
SINGAPORE -- Certificate of Entitlement (COE) premiums may have set some record highs in 2023, but experts say the trend is not expected to continue this year due to an increase in supply.
This is because more cars were sold 10 years ago in 2014, compared to 2013, leading to more deregistrations this year. Unless renewed, COEs expire after 10 years.
Already, the first COE exercise of 2024 saw a sharp fall in premiums for cars.
On the other hand, in assessing the overall transport picture in Singapore, the experts noted that private car ride-hailing costs are set to go up owing to fluctuations in energy costs, operational costs, and a lack of manpower.
However, things may look up for commuters after the second quarter of 2024 when the Government's review of the point-to-point transport industry's structure concludes, which aims to improve the availability of services.
Another key element in the big picture of transport services is public transport.
Commuters living in the east will possibly have to brace themselves for more rationalisation of bus services once Stage 4 of the Thomson-East Coast Line (TEL) launches this year.
As for the adoption of electric vehicles (EVs), experts do not think 2024 will see a significant spike in demand as there are still several teething issues to be ironed out to boost consumer confidence.
These issues include battery charging, vehicle costs, and the availability of better infrastructure globally and regionally.
Sky-high COE premiums were a hot-button issue in 2023, igniting debate as there was more demand than supply in various rounds of the twice a month bidding process.
However, transport analysts told TODAY that Singaporeans can expect a gradual increase in COE supply this year, especially towards the latter part of the year.
This is due to high deregistrations in the 10-year COE cycle, as more cars were sold 10 years ago in 2014 than in 2013, and the "cut-and-fill" move by the Government to bring forward COE quotas from peak periods.
According to the Annual Vehicle Statistics 2022 on the Land Transport Authority website, a total of 55,588 new registrations by COEs were made in 2014 across all categories -- a 21.5 per cent jump from 2013's 45,761.
New registrations of Category A and Category B -- for smaller and larger cars, respectively -- totalled 28,615, a 30 per cent increase from the previous year's total of 22,008.
Transport economist Associate Professor Walter Theseira said this will moderate COE prices, but also bring many existing car owners into the market again as they seek to replace cars.
"So instead of having a situation of very high COE prices that affect only a tiny number of potential buyers, we'll probably have moderately high COE prices that start to affect a larger number of buyers," he said.
Prof Theseira added that this situation would cause some pain, to the extent that the premiums are likely to be higher than what drivers paid the last time they bought their cars in 2014 and onwards.
Last November, Acting Minister for Transport Chee Hong Tat said the "cut-and-fill" move would fill any current supply troughs by bringing forward supply from peak periods while maintaining the zero-vehicle growth policy.
Hence, motorists can expect a significant increase in COE supply from the second half of 2024 before reaching the peak supply years from 2026 to 2027.
