07 Apr COVID-19 Impact on COE prices
With the suspension of COE bidding announced by The Land Transport Authority in April and the on-going COVID-19 crisis, we predict the effects this will have on May COE prices and the upcoming months.
Year 2020 has already proven to be a slow year for the car industry. COE quota from Feb to April has shrunk by 30% and the number of COE bids has dropped 43% compared to the same period in 2019. With the drop in demand outpacing the drop in supply, COE prices have fallen accordingly.
COE prices in May will see a small dip, this is because there will be some carry over effect from March with new car dealers fulfiling outstanding sales with buyers. COE prices will continue to be around $30,000/- or less. This downward trend is in accordance with the economic situation in Singapore and we expect it to worsen.
With the one-month circuit breaker, it wipes out the entire month of sale in April. With a gloomy economic recession, car sales will be significantly reduced in the coming months. Sales cancelation and delay in decision making of such a big ticket purchase is definite until the situation stabilised.
With COE prices likely to fall, owners whose car that are reacing the 10 year mark will be more inclined to extending the COE. This will further impact new car sales and we anticipate the fall into the $20,000/- range. The suspension of the COE bidding in May will also result in unused COE quota for the month of April 2020. Greater clarity will likely to be available only in the coming months after July 2020′.
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