What happens to the COE bidding market post circuit breaker?
While the automotive industry takes a hit with having to close down all of its showrooms and dealerships, the impact of the circuit breaker extended to the roads through COE prices. With changing lifestyle perspectives and consumer behaviours, COE prices were impacted and influenced the past few months post circuit breaker. COE bidding exercises have recently resumed and here's all you need to know about it.
COE 101
COE prices depend on the number of cars on our roads, in other words, the quota available for each vehicle category. If there are lesser cars on the roads, it reflects a lower demand and thus a higher quota, which results in lower COE prices. The alternative is also true, where higher demands contribute to an increase in COE prices. While there are other various factors they affect COE prices, this is still the main cause.
COE Post Circuit Breaker
During the circuit breaker, there was a delay in getting cars scrapped due to social distancing measures that were in place, which resulted in a spike in scrapped cars in the subsequent months. Many were also working from home, conducting their businesses or errands online, and refrained from spending on big-ticket items due to the uncertainty of the pandemic, which resulted in lower demand and a higher quota. This is reflected in the drop of COE prices in the latest November 2020 bidding exercise.
What happens next?
In previous years, pre-pandemic, December usually sees lower demand for cars because most are spending their dollars on holiday trips overseas. However, with the new normal and imposed travel limitations, we cannot hold on to this precedent. As the economy slowly recovers and provided the world is blessed without a second wave of the virus, we see the demand slowly increasing and the quota dipping, which will mean in COE prices increasing gradually. Till then, now is a good time as any to take advantage of the lowered COE prices before it goes up again.
