Last chance before 1st July’s VES revision, should you buy a car now?

June’s first bidding of the Certificate of Entitlement (COE) premiums fell to an 8-year-low for passenger cars, with Category A at $36,421 and Category B at $36,000. With just under a month before the Particulate Matter (PM) of the new Vehicular Emissions Scheme (VES) kicks in, what do all these mean for the motor industry?

The COE is what drives up prices of cars in Singapore (together with the Additional Registration Fee (ARF), Excise Duty, and Goods and Services Tax). With a dip in the COE premiums, it would then also mean lower prices in the cars. For instance, you’ll pay $1,989 less in the June 2018 bid as compared to the previous month.

To find out more on how cars are priced in Singapore, read: How is my car valuated in Singapore?

The VES assess vehicles on four other pollutants – hydrocarbons (HC), nitrogen oxides (NOx), carbon monoxide (CO), and particulate matter (PM) – on top of the preexisting carbon dioxide (CO2) emissions that was in the Carbon Emissions-Based Vehicle Scheme (CEVS) pre 2018. The VES surcharge or rebate is dependent on the worst-performing pollutant of these five in order to encourage consumers to select models that have lower emissions.

In an effort to provide motor dealers more time to submit the PM emissions information for assessment, the PM criterion has been exempted ever since the new VES kicked in on 1 January 2018. But from onwards, VES banding surcharges and rebates will then take into consideration the PM pollutant. As such, this may further affect the VES banding for cars in Singapore.

With the lowered COE and to catch the window of opportunity before the VES banding changes, car owners may wish to purchase their cars before 1 July 2018.

However, there are some other dealers that argue that COE go even lower in the next few months. With the VES in place, many car dealers have already started to phase out cars that will emit harmful pollutants, as they are no longer feasible products in Singapore’s competitive motor market. The inclusion of PM pollutants may then further stablise the COE premiums.

Well, the answer is both a yes and a no, and it really depends on your choice of car and your current circumstances.

For cars whose VES banding may go down by the inclusion of the PM criterion, it may be a wise time to purchase that car. This is the period of time where you’ll also see many car dealers giving promotions such as “Beat the VES surcharge with $xx,000 off, purchase by 1 July 2018!” or “Last chance to purchase before $xx,000 price increment in July”. Roadshows may also be held to clear the cars that will disadvantage from the inclusion of particulate matter.

Ultimately, the purchase of a car is a big decision and even with the additional perks and discounts, should you not need a new car at that moment these would all be for naught. Especially when you have a pre-existing vehicle, you may not be able to sell your car at the best price possible and purchase a new one in time without having to fund loans for two vehicles.

The purchase of a used car may not necessarily be influenced by the dip in COE or the inclusion of particulate matter in the new VES, unless one is looking to purchase a COE car. With low COE prices, it may be more affordable to purchase a COE car and renew its COE.

Otherwise, consider also the ex-Uber cars from Lion City Rental after Uber made its way out of Singapore.

You may also be interested in:

• Buying a used car – PARF car vs COE car
• Read our picks on the cars that you can get at a steal and register your interest: An UBER Mega Sale! Ex-Uber Cars Are Going For A Song!

Definitely, with the low COE prices, if your vehicle is still in tip-top condition, it may be wise to renew your COE.

With that being said, don’t be in too much of a hurry to renew your COE right now. Depending on the expiry date of your existing 10-year COE, you may want to wait for the next PQP.

Your payable Prevailing Quota Premium (PQP) rate is for the exact month that your COE expires. If you choose to renew before then, it will follow the PQP rate at the time in which you renew your COE. You may then want to wait to renew it when the PQP is low.

For instance, if your COE expires at the start of September, wait till the PQP of September comes out (usually during the third week of the previous month: August) and if PQP of August ($40,000) is lower than that of September ($42,000), you should renew it during the third week of August before your COE expires. This would grant you a savings of $2,000.

But if you have renewed your COE before your pre-existing COE expires, the new COE will commence from the 1st of the following month that you have paid your PQP and the remaining pre-existing COE will be . So do calculate your costs accordingly before you renew your COE and check to see which time period in which you can get the lowest PQP!

You may also be interested in:

• When my COE expires, should I scrap or renew my COE?
• 8 things you need to know before renewing your COE

All in all, the recent dip in COE premiums as well as the upcoming inclusion of particulate matter in the new VES, has definitely cause some consumers to hurry to purchase their next new ride. Otherwise, the low COE prices are also good indicators for those who wish to renew their COE or purchase a used COE car.

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