Apr 2, 2010
THE recent spike in certificate of entitlement (COE) prices has stirred emotions among car buyers and dealers. Instead of making tweaks, the authorities should consider revamping the system to make it more equitable and effective.
One way is to allow COEs to be tied to the vehicle owner instead of the vehicle.
Car owners can then transfer the remaining COE to their next vehicle. There are many advantages to this proposal:
# The actual number of 'used' COEs will not be artificially inflated because of COEs that are tied to unsold second-hand cars. This will result in a better reflection of actual demand for COEs as only car buyers without an existing COE will need to bid for a COE.
# Car dealers will also benefit as new and used cars will be sold without COEs. Car prices would become more stable for dealers and more transparent for buyers.
[Except for prices of second-hand cars. One scenario is an existing car owner with a COE already will buy the second hand car, and one wonders why one would do that. A serial second-hand car owner will sell an older car, say 8 yrs or older, to buy a newer second hand car, say 3 - 5 years old. With 2 years, left he would be looking to either bid for a new COE in 2 years with the uncertainty of prices in 2 years. A second scenario is a new car owner, without an existing car looking to buy a second hand car...]
# Existing car owners will be more free to change to a new or second-hand car without being concerned about how changes in COE prices will affect car prices.
[... because that burden will now be transferred to the second hand car would-be owner, who would have to bid for COE on a used car. ]
# With consumers able to transfer their COEs to their next vehicle, they would be more cautious in bidding for COEs.
Consumers who need more than one COE should be made to pay more for their subsequent COEs.
For example, a consumer who needs a second or third car should be made to pay an additional levy of 30 per cent and 50 per cent respectively on top of the prevailing COE price.
The idea is to make the COE system more consumer- and business-friendly. The Government can still continue to peg the availability of COEs to the number of COEs deregistered but further changes will go a long way in making the system better.
Loh Chee Meng
[So. What are the disadvantages?
Like many forum writers, the author speaks from his own perspective and interests. Let me guess. He is a car owner. He was just thinking about getting a new car to replace his slightly used (less than 5 year old car), But DAMN! the COE went up. He can't believe it. He paid like $5k for his last COE and now it is $14k or maybe more in the next bidding. So if he can hold onto the COE he paid for his current car, he doesn't have to worry about bidding for a new COE. Let the buyer of his current car bid for it.
So some poor sod who can only afford second hand car will pay high prices for COE in order to own his used car? Most likely, he won't be able to sell his car cos the second hand car market would have collapsed. Yes second hand cars will be cheaper, because there's no market for them.
The 10-year COE tied to the vehicle is not perfect. But it keeps things straight, relatively. ]
THE recent spike in certificate of entitlement (COE) prices has stirred emotions among car buyers and dealers. Instead of making tweaks, the authorities should consider revamping the system to make it more equitable and effective.
One way is to allow COEs to be tied to the vehicle owner instead of the vehicle.
Car owners can then transfer the remaining COE to their next vehicle. There are many advantages to this proposal:
# The actual number of 'used' COEs will not be artificially inflated because of COEs that are tied to unsold second-hand cars. This will result in a better reflection of actual demand for COEs as only car buyers without an existing COE will need to bid for a COE.
# Car dealers will also benefit as new and used cars will be sold without COEs. Car prices would become more stable for dealers and more transparent for buyers.
[Except for prices of second-hand cars. One scenario is an existing car owner with a COE already will buy the second hand car, and one wonders why one would do that. A serial second-hand car owner will sell an older car, say 8 yrs or older, to buy a newer second hand car, say 3 - 5 years old. With 2 years, left he would be looking to either bid for a new COE in 2 years with the uncertainty of prices in 2 years. A second scenario is a new car owner, without an existing car looking to buy a second hand car...]
# Existing car owners will be more free to change to a new or second-hand car without being concerned about how changes in COE prices will affect car prices.
[... because that burden will now be transferred to the second hand car would-be owner, who would have to bid for COE on a used car. ]
# With consumers able to transfer their COEs to their next vehicle, they would be more cautious in bidding for COEs.
Consumers who need more than one COE should be made to pay more for their subsequent COEs.
For example, a consumer who needs a second or third car should be made to pay an additional levy of 30 per cent and 50 per cent respectively on top of the prevailing COE price.
The idea is to make the COE system more consumer- and business-friendly. The Government can still continue to peg the availability of COEs to the number of COEs deregistered but further changes will go a long way in making the system better.
Loh Chee Meng
[So. What are the disadvantages?
Like many forum writers, the author speaks from his own perspective and interests. Let me guess. He is a car owner. He was just thinking about getting a new car to replace his slightly used (less than 5 year old car), But DAMN! the COE went up. He can't believe it. He paid like $5k for his last COE and now it is $14k or maybe more in the next bidding. So if he can hold onto the COE he paid for his current car, he doesn't have to worry about bidding for a new COE. Let the buyer of his current car bid for it.
So some poor sod who can only afford second hand car will pay high prices for COE in order to own his used car? Most likely, he won't be able to sell his car cos the second hand car market would have collapsed. Yes second hand cars will be cheaper, because there's no market for them.
The 10-year COE tied to the vehicle is not perfect. But it keeps things straight, relatively. ]
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