Chart of the Day: Here’s why COE prices won’t sink even as car de-registrations surge

Over 11,000 vehicles were de-registered in April.

Robust demand from private-hire car companies will keep upward pressure on Certificate of Entitlement (COE) premiums in coming months, despite the rising number of vehicle de-registrations.

This chart from Maybank Kim Eng shows that vehicle de-registrations surged in March and April this year. Some 13,580 vehicles were de-registered in March, followed by 11,146 vehicles in April.

As a result, new car registration in April stayed high at 7,188, compared to 7,106 in March.

“While the higher quota as well as a weaker economic outlook is expected to put downward pressure on car prices in coming months, the presence of private hire car services companies such as Uber, Grab and Strides is expected to keep upward pressure on COE premium,” Maybank Kim Eng noted.

In the second COE bidding exercise in May, for instance, Uber-owned company Lion City Rental submitted 870 bids in all three categories and managed to get 840 COEs.

Overall, Lion City had reportedly secured 1,700 car COEs within the last 2 months of bidding.

As a result, prices of Category A and Category B COEs only dropped marginally during the second tender in May, while prices of Category C and Category E cars increased.