Industry Veteran's Verdict: Rising Supply Likely to Push Down COE Prices

Research done by the writer shows clear link between supply and prices.

- Victor Kwan

Singapore and Singaporeans have had a complex relationship with the certificate of entitlement (COE) for more than three decades. Everyone has a view on it. Here are mine – having spent 24 years in the automotive industry. In a nutshell, I believe the drop in COE prices is likely to continue, even though others may tell you the opposite. Let me explain why.

I remember that tense afternoon meeting some time in 2012. I was then the managing director of a Singapore-based automotive dealer group and was caught in the middle of a gut-wrenching professional roller-coaster ride akin to those at Disneyland. Except it was worse. My ride lasted years and not mere minutes. You see, COE supply was at a record low at that time. For an automotive dealer, this meant a minuscule market size, high COE prices, plummeting sales volume and even retrenchment. To make matters worse, things had been completely opposite just a few years prior – supply at a record high, the prices low and businesses expanding.

Amid this unhappy thrill ride, I was invited to a meeting with the Land Transport Authority. Given the unfavourable situation at that time, they were keen to hear the grouses from the ground. And grouse I did. These peaks and troughs in COE supply are unhealthy for the country's transport system, not just commercially but socially as well, I said.