Lai Liao: Car Prices Dropped After COE Dropped, With a Car Sold at Less Than $60K

Image: Chatchai Somwat / Shutterstock.com (Image is for illustration purpose only)

Dr Strange might be able to see different versions of the future, but we’ve an even better ability without the use of an Infinity Stone: we can see the prices of cars in the future.

(Just in Singapore, but good enough lah)

After all, if you’ve downloaded our app and read this article about how I project that prices of cars are going to drop in early July, you’ll agree that my ability prevails over Dr Strange’s.

In fact, here’s one more prediction from yours truly: England’s going to lift the World Cup next Sunday.

I digress, but anyways, we know cars in Singapore are expensive. Here, take a look at a video we’ve done on car ownership and you’ll know that a car in Singapore doesn’t just cost an arm and a leg: it cost countless arms and legs.

(Since you’re here, subscribe to our YouTube Channel for more informative videos lah)

While we can’t change many of the fees, there’s one that’s determined by demand and supply: the COE.

And according to an adjustment that should have taken place two years ago, but was messed by private hire firms upping their rental fleet, prices are going to drop like crazy about right now.

The second tender in June (there are two rounds every month) has already placed the small car COE (Cat A) at its lowest in eight years. And just last week? It dropped from $34,110 to even lower, at $25,000.

If you’re a car siao who looks at COE prices like a hawk, you’ll know that this kind of number only existed in the days before COE exploded – since 2010, the annual average COE price is always above $30,000.

Then again, it’s not that surprising since anyone who’s been analyzing the trend like Warren Buffett would know that it’ll continue to drop.

But What About the VES?

If you watch the video, you’ll see that we spoke about “VES” that’s something new.

To put it simply, it’s an additional tax that encourages people to buy cars that emit less pollutants. Yeah, it’s like how KFC introduced its no-straw policy to save the earth – just that this time, it affects rich people’s wallet instead of causing inconvenience.

Certain car models’ prices would increase with the new VES banding that kicks in on 1 July 2018; for example, the highly popular Toyota C-HR Hybrid S has a rebate of $20,000 before 1 July, and after 1 July, it’ll need to pay an extra $10,000 surcharge, effectively meaning that the price of the car should theoretically increase by $30,000 overnight.

This would explain why, despite a drop in COE last month, the price of the model increased instead on that same month.

Image: sgcarmart.com

But Not All Models are Affected

In fact, some models would go even cheaper.

For example, the Honda Jazz has been on a constant drop in its price since May 2018, since it’s not affected from the VES.

Image: sgcarmart.com

However, based on the example of the C-HR (you can also check out others, which shows that prices of Point-A to Point-B cars are still dropping), the drop in COE price does counteract the VES taxes.

And there’s more.

COE Prices Are Still Going to Drop

One of the key results for the drop is due to an adjustment that should have taken place two years ago, and the sudden spike in the supply of second-hand cars in the market. According to the Straits Times, dealers are seeing a sales “up to more than three times” this weekend.

This panic buying will, of course, lead to a COE price increase…temporarily.

Because logically, it takes a while for the high supply and high demand to turn to a high-supply and low-demand period: a check on second-hand cars and car rental firms show that they’ve yet to adjust their price according to market forces.

But let’s face it: they’ll eventually have to face reality and drop the prices, or their business will drop.

A Car at less than $60K? It’s Possible Now

Maybe you’ve read our article about the eight cars that now cost less than $80K. Well, there’s now even one that’s less than $60K, and it’s a Japanese car.

Image: Foto by M / Shutterstock.com

The Mitsubishi Attrage is now at $59,999, and this familiar Uber-ized car is now effectively the most affordable new car in Singapore now, followed by Perodua Bezza, a Malaysia car at $64,800.

But well, guess what? Save this article and read this again in August. You might just think that $59,999 is way too expensive #justsaying

Now you know what Singaporeans are talking about today; do check back tomorrow for another piece of news of the day!