Here's how Grab and Uber is affecting COE prices in Singapore

Small cars' Certificate of Entitlement prices in Singapore have dropped to their seven-year low in the past week and prices are expected to fall further.


Small car certificate of entitlement (COE) premiums continued its downtrend, based on the latest bidding results and the slump is nowhere near the end.

The Business Times reported earlier this week that passenger car COEs plunged by almost S$7,000, clocking the third consecutive bidding exercise where they have declined.

Also read: Grab offers huge discounts to tempt cabbies from ComfortDelGro

The COE premiums for these cars, which fall into the vehicle category A, went down to S$36,001, registering a seven-year low. Category B vehicles, or cars above 1,600 cc and 130 hp, also saw their COE premiums go down to S$49,000.

Transport experts interviewed by Channel News Asia predicted that this downtrend might linger due to several factors. For instance, Assistant Professor Terence Fan from the Singapore Management University reckoned that Uber's potential tie-up with taxi company ComfortDelGro is partially linked to the fall of COE prices.

"The COE in the past year or so has been much stronger than in previous periods of slow economic growth. Judging from the aggressive promotion of private-hire vehicles for rent, speculation has been rife that the COE has been propped up by these operators," he told Channel News Asia.

The deal between Uber and ComfortDelGro could result into the two groups curbing their total fleet size, signalling the ride-hailing firm's plans to soften its growth in fleet size.

Meanwhile, economist Dr Walter Theseira from Singapore University of Social Sciences said premiums have been boosted by the demand for private-hire cars. However, he argued that there could be a rebound as lower prices could attract more car buyers.

"Large price changes in the COE market tend to be self-correcting. Usually, COE price adjustments are followed by interest in car dealerships but only if dealers pass through the price drops. The dealers don't pass through all of the price drops because they know that more buyers will come, and that means prices in the next round are likely to rebound," the economist said.

On the other hand, car dealers cite the changes in the new Euro VI ruling might be the culprit behind the price drop. Starting this month, newly-acquired cars are required to comply with European carmaker exhaust and noise emissions standards.

Jeff Phua, head of AutoPrestige Gallery, said buyers will continue to wait and expect for further price slump in the next COE bidding.

"But prices should head north from October onwards till next year - the main reason being the change in taxes come January 2018. We expect and welcome the surge of buyers this weekend and we have already lowered our cars prices relatively," he said in the report.