SINGAPORE — The higher taxes that kicked in for bigger bikes last month could have forced some prospective buyers to look at lower-end models or renew their current rides, leading to Certificate of Entitlement (COE) premiums surging unexpectedly to a new high in successive biddings.
With premiums for motorcycles soaring to a historical high of S$8,081 at the close of the COE exercise on Wednesday (March 29), it is anyone’s guess how prices would move from now, market observers told TODAY.
Mr Wilson Phoon, director of motorcycle dealer AS Phoon, said he was shocked that premiums continued to head north from the previous peak of S$7,483 two weeks ago. He pointed out that in this and the previous round of bidding, bike premiums went up by about S$600 to S$700, which is unusual when the average increments used to be S$100 to S$200 in recent years.
Mr Norman Lee, honorary general secretary of the Singapore Motor Cycle Trade Association (SMTCA), said the recent introduction of a tiered Additional Registration Fee (ARF) for motorcycles prompted prospective buyers of “luxury bikes” to switch to buying two-wheelers with a lower Open Market Value (OMV). And this could have pushed up premiums, because this group is made up of affluent buyers willing to fork out more for COEs than be hit by higher taxes.
Under the new ARF system, which took effect in February, the 15-per-cent ARF rate will stay for motorcycles with an OMV of up to S$5,000. The subsequent S$5,000 of a motorcycle’s OMV will incur a 50-per-cent ARF, and the remaining OMV above S$10,000 will come with a 100-per-cent ARF.
This move was meant to address the trend of costlier motorcycles gaining popularity, Finance Minister Heng Swee Keat said in the Government’s Budget statement last month, but he also said more than half of new motorcycle buyers would not have to pay more.
Even then, Mr Lee is of the view that the common man who depends on motorbikes for work would now feel the pinch in the form of hefty COE premiums. “The ARF was intended as a progressive ‘cooling measure’, but it appears to have backfired in the short term,” he said.
Fellow SMTCA member Tony Yeo said COE premiums may have spiked this round because owners of 10-year-old bikes are opting to renew their certificates, reducing the supply available to new buyers. With transport needs forming a large proportion of costs for businesses relying on despatch drivers, the rise in bike premiums may even be passed on to consumers, he added.
In the latest bidding exercise, car premiums continued to climb. Prices for smaller cars (up to 1600cc and 97kw) rose 1.92 per cent to S$51,765, while those for bigger cars (above 1,600cc or 97kw) went up 1.31 per cent to S$54,000. COE prices in the open category, which may be used for any vehicle type, increased by 2.83 per cent to S$54,501, while prices fell for commercial vehicles — a slide of 4.01 per cent to S$47,036.