COE Analysis

[duo]

I am still fighting this battle. Just sent a email to minister of transport 3 weeks back.

 

As usual, we don't get any reply from the ministers themselves but his PA.

 

 

 

Next task is to find out when is the COE policy review!!!

 

I still believe that there is still hope in this world, no matter how many times the system tries/had screws us :cry:

Seems like a template reply to me.

[Gerald]

Seems like a template reply to me.

 

Dont bother fighting bro. Use the time to earn more money to buy that 8k coe better..wont win..

[Gerald]

I am still fighting this battle. Just sent a email to minister of transport 3 weeks back.

 

As usual, we don't get any reply from the ministers themselves but his PA.

 

 

 

Next task is to find out when is the COE policy review!!!

 

I still believe that there is still hope in this world, no matter how many times the system tries/had screws us :cry:

 

Dont waste your time... just accept the fact that 8k coe is here to stay.. you will be happier...lol

[duo]

Dont bother fighting bro. Use the time to earn more money to buy that 8k coe better..wont win..

Fighting? Neither fighting nor giving up. Digging up old bicycle parts to build a complete. When the time comes can cycle to work.

[victorp]

This coming bidding exercise, will it increase or decrease?

[wait4me]

comfirm increase , up and up

so that u loan and loan

[reize]

This coming bidding exercise, will it increase or decrease?

 

The RSS COE has set sail and will not be returning. Forever.

[duo]

comfirm increase , up and up

so that u loan and loan

Then there will be 10 years loan for bikes. Or is it already available? Then it will be a norm like how 5 years loan for a 2B bike is currently.

[kzone]

Out of curiosity, will u guys be happy if govt introduce loan restrictions similar to cars say max 70% loan for max 5 years?

[MR BIKER]

Out of curiosity, will u guys be happy if govt introduce loan restrictions similar to cars say max 70% loan for max 5 years?

 

DOES it help?? look a car. still many buyers

[kzone]

DOES it help?? look a car. still many buyers

 

I'm not saying it helps.. it also depends on what one think "help" means. For cars, COE drops when the loan restrictions are tighten cos it makes less ppl able to afford the downpayment. But when loan restrictions are relaxed, COE goes up but it "helps" more ppl with lower downpayment.

 

At the end of the day, whatever "help" the govt does is to help themselves... if along the way, some of us benefit, its merely a by product.

[reize]

I'm not saying it helps.. it also depends on what one think "help" means. For cars, COE drops when the loan restrictions are tighten cos it makes less ppl able to afford the downpayment. But when loan restrictions are relaxed, COE goes up but it "helps" more ppl with lower downpayment.

 

At the end of the day, whatever "help" the govt does is to help themselves... if along the way, some of us benefit, its merely a by product.

 

I mean yea, it definitely helps. But not the people you are thinking. It will definitely benefit the wealthier people by making the overall cost of the bike cheaper, since downpayments are not the main problem for them.

 

If you are someone living paycheck to paycheck, the downpayment is often the bigger hurdle than the total price.

[kzone]

I mean yea, it definitely helps. But not the people you are thinking. It will definitely benefit the wealthier people by making the overall cost of the bike cheaper, since downpayments are not the main problem for them.

 

If you are someone living paycheck to paycheck, the downpayment is often the bigger hurdle than the total price.

 

 

I agree...

[wait4me]

Then there will be 10 years loan for bikes. Or is it already available? Then it will be a norm like how 5 years loan for a 2B bike is currently.

i tink now have 7 years le

 

Out of curiosity, will u guys be happy if govt introduce loan restrictions similar to cars say max 70% loan for max 5 years?

 

different ,

cars have bank loan , then if u wanna bypass it , the remainder can take from the shop and loan with higher interest

but bikes, all the way is from shop loan and not from bank

[w7_lee]

This piece of news from yesterday...

 

http://www.straitstimes.com/singapore/transport/lta-meets-four-dealers-over-motorcycle-coe-price-spikes

[kzone]

i tink now have 7 years le

 

 

 

different ,

cars have bank loan , then if u wanna bypass it , the remainder can take from the shop and loan with higher interest

but bikes, all the way is from shop loan and not from bank

 

there loans fm banks n finance companies as well. anyway, MAS can impose regulations on all loan transactions including in house loans.

[victorp]

This piece of news from yesterday...

 

http://www.straitstimes.com/singapore/transport/lta-meets-four-dealers-over-motorcycle-coe-price-spikes

 

Thanks for sharing

[kzone]

This piece of news from yesterday...

 

http://www.straitstimes.com/singapore/transport/lta-meets-four-dealers-over-motorcycle-coe-price-spikes

 

Are they actually doing anything illegal?

[victorp]

Are they actually doing anything illegal?

 

They are not doing anything illegal, but because no COE = no bike sales, they just bid any amount.

 

Which bike shop can bid the most COE then can sell the most bike. Will you buy a bike from a shop if COE not included?

 

No matter how high the COE price, everything also is we pay. Including the interest. So if the financing is in-house, the bike shop benefit the most.

[kzone]

They are not doing anything illegal, but because no COE = no bike sales, they just bid any amount.

 

Which bike shop can bid the most COE then can sell the most bike. Will you buy a bike from a shop if COE not included?

 

No matter how high the COE price, everything also is we pay. Including the interest. So if the financing is in-house, the bike shop benefit the most.

 

so they are just maximising their profit within legal means. Its the policies that need changing and its the policy makers that are to blame.

[Bikeninja]

Here is a very good analysis of the Motorcycle conundrum of which we are facing currently

 

http://www.channelnewsasia.com/news/singapore/is-speculative-trade-in-motorcycle-coes-helping-to-push-them-to/3660820.html

 

SINGAPORE: As Certificates of Entitlement (COEs) for motorcycles continue to reach record highs, hitting S$8,081 in March, questions are being asked about the reasons behind the relentless rise, with some claiming that speculative bids by dealers as well as shortcomings with the bidding process are to blame.

 

Bike owners and dealers Channel NewsAsia spoke to suggest that a key reason for the increase is that a deposit of only S$200 is needed to initially secure a COE, with dealers able to make bulk bids.

 

This allows them to stockpile motorbike COEs which can then be sold - before they have been assigned to a specific buyer - for a few hundred dollars of profit to dealers who need a COE quickly, according to Mr Ong Kim Hua, who owns bike shop Dirt Wheels.

 

It is “easy money”, said Mr Ong. “There is indeed a trading market where everybody buys and sells COEs. Anyone can do it. Even you can do it, as you don’t have to be from the motorcycle trade to bid for COEs.”

 

He pointed out that motorbike COEs are limited, with only around 300 released every two weeks or so. He said this means that demand can outstrip supply, creating the conditions for speculators to profit. “Whoever has a COE quota on hand, if any bike shop owner or dealer wants to sell a new machine, (they) would definitely have to buy it from you,” said Mr Ong.

 

Mr Michael Ang, the owner of bike shop S1 Motoring, agreed that other dealers are definitely stockpiling COEs. He said: “We don’t play (the system), and we only bid for sufficient use. For us, we do have customers who require the bike sooner rather than later. In those cases, we will definitely bid a certain amount whereby we feel that it will definitely be used up.

 

“But there are also instances where we would have to buy COE quotas from other dealers.”

 

DEALERS HAVE LITTLE TO LOSE

 

There is little financial risk for those dealers who want to carry out speculative trade in COEs, as putting down the S$200 deposit to initially acquire the COE commits the holder to nothing - there is no rule to say that the full amount has to be paid eventually. Instead, dealers can simply let the COE lapse after six months if they cannot find another dealer to sell the COE to, do not have enough bike buyers or if COEs go down in value.

 

“When nobody wants to buy the COE, these dealers will simply throw it away at a small loss. Every COE they throw away is S$200, but every time they gain, it’s a big number,” said Mr Ong.

 

Singapore University of Social Sciences (SUSS) economist Dr Walter Theseira also pointed to the low deposit as a reason why motorbike COEs are vulnerable to speculators. He said: “Someone who attempts to speculate and loses - for example, they buy COEs at a high price and the price collapses - doesn't lose much from letting a COE expire without a buyer."

 

In addition, the availability of motorcycle COEs is quite low in number relative to car COEs, said Dr Theseira. “This means that the impact of a few dealers attempting to speculate in the market by holding on to COEs without a ready buyer is greater."

 

The ease and lucrativeness of the speculative trade is being seen by some in motorcycling circles as a reason for the increase in COEs, Mr Ong said.

 

“To secure new quotas for themselves, all bidders have to do is to keep bidding higher and higher, hence pushing up the cost of the COEs as a whole. (COE speculation) is a very simple and open 'investment' - anyone can buy and anyone can sell without incurring the actual cost of that COE premium,” he said.

 

Mr Ong questioned why measures used to curb COE speculation in cars have not been applied to motorcycle COEs. “Cars used to be the same way as you’d only need S$200 to bid for a single COE quota, but the LTA (Land Transport Authority) increased it to S$10,000. I don’t know why LTA isn’t doing anything about this for bikes.”

 

Dr Theseira also explained why motorbike COEs are more likely to be the subject of speculative activity. He said: “Whether this happens all the time is another matter. But the motorcycle market is much more vulnerable to this practice than the car market, because the car market's scale and other rules mean that dealers would find it much more expensive to attempt to skew the market.”

 

PROFITING FROM COE INCREASE

 

An additional reason being pinpointed as a possible cause for a spike in motorbike COEs in the past few exercises is that dealers do not have to be transparent with customers about when their COE was obtained at the point of purchasing a new bike.

 

"If you have a COE quota premium from six months ago, all you have to do is look at how much it costs then, and minus this off from the amount which it is now - that is how much those bike dealers can possibly make,” said Mr Ong.

 

In particular, COEs obtained before February’s new three-tiered Additional Registration Fee (ARF) ruling kicked in could be of high resale value in the COE trading market, according Dr Theseira. “The high value of pre-February Category D COEs comes from the fact that they allow registration without paying tiered ARF.”

 

Mr Ang from S1 Motoring agreed that this means some dealers are hanging on to older motorbike COEs obtained before the ARF ruling as they have a higher potential value in the COE trading market.

 

“People are still definitely hanging on to older COEs which are unaffected by the ARF rulings,” he said. “There will probably be such cases where these COEs will be sold at a marked-up cost.”

 

Dr Theseira explained further: “Any dealer with one of these COEs can effectively pocket the difference between a bike's price with tiered ARF and without tiered ARF. A buyer who doesn't want a pre-February Cat D COE will have no choice but to get a COE today, and pay the tiered ARF.

 

“In turn, this means that dealers with these COEs will be quite reluctant to release them except for the highest valued bikes. This contributes to the current tight market condition.”

 

The net result of dealers hoarding these “higher value” COEs is that demand has been outstripping supply even further, which means that anyone in the market for a motorbike COE - whether it is a dealer looking to secure one for a confirmed buyer, or someone looking to make money from the trade in COEs - will need to bid high.

 

PROFITING FROM LOAN FINANCING

 

While some dealers have complained that higher COEs may be pricing some customers out of the market, Dr Theseira believes that others may be happy about the current situation with no desire to bring down premiums, as in-house loan financing is another way dealers profit from high COE prices.

 

He said: "Some dealers provide financing for their bikes. Since the total price of the bike is financed, every additional dollar means more profits from financing.”

 

Dr Theseira added: "To some extent, the car industry suffers from the same problem - that dealers are quite happy to sell more expensive COEs and hence cars because they benefit from financing - but the problem is not as severe because car dealers usually provide financing from banks, and so their profit on financing is limited only to the commissions they get from banks.

 

"But in the motorcycle market, dealers often provide in-house financing, so they directly benefit from the interest charged on a larger loan."

 

It is therefore in the interest of dealers to keep COE prices high, said Dr Theseira. “Some of the dealers are sitting on inventory of COEs and bikes. This inventory value, if purchased at higher COE prices, would fall if COE prices were to go down.”

 

He added: “To avoid taking this loss, dealers with large stocks of COEs, or with stocks of motorcycles already registered with COEs, would prefer it if COE prices were maintained or even rose. When the COE price rises, they can justify selling a motorcycle with a COE obtained at a lower price at a high price, and book the difference as pure profit.”

 

“CUSTOMERS CAN ALWAYS WALK AWAY”: SMCTA

 

The reason behind the rise in COEs is an increasingly hot topic for Singapore’s motorcycling community and LTA is also making attempts to drill into the issue. Responding to Channel NewsAsia’s queries, a spokesperson said: “The LTA is meeting some of the major motorcycle dealers to better understand the recent trends in COE prices and motorcycle purchases.”

 

Meanwhile, Singapore Motor Cycle Trade Association (SMCTA) honorary general-secretary Norman Lee played down the potential impact of COE speculation. He said: “There are a lot of netizens who are saying that motorcycle dealers are speculating the system. With that, I think the question is, how much trust do we have in the integrity of the COE bidding? If it can be speculated, we have to question the integrity of the system.”

 

The onus is still with the buyer on whether or not the sale will go through, said Mr Lee. “When it comes to a sales agreement, the COE value is always stated in the sales agreement. If the COE cannot be bid on the agreed terms, the customer can always walk away. We’ve never seen a customer who has brought this issue up to CASE to say that they have been cheated of a high COE.”

 

He added: “We went through all the reports and we found dealers who indeed had buyers who cancelled their orders, back when the COE was (initially) pegged at S$6,800 during their sales agreement. When the COE prices later shot up to S$7,400, buyers decided to back out of the sales agreement - which can be done.

 

“Those buyers who are thinking of bailing out (however) ... would have to decide between simply accepting the COE despite the high current price, or wait it out and risk the COE jumping even higher in the next two weeks.”

 

With the next COE exercise due on Wednesday (Apr 12), the focus once again will be on whether motorbike premiums reach another record high.

 

- CNA/fr

[wait4me]

They are not doing anything illegal, but because no COE = no bike sales, they just bid any amount.

 

Which bike shop can bid the most COE then can sell the most bike. Will you buy a bike from a shop if COE not included?

 

No matter how high the COE price, everything also is we pay. Including the interest. So if the financing is in-house, the bike shop benefit the most.

 

yeah , you got that right,

now waitng for them to increase their interest..

 

now COE is transferable , wa if i got 200k now

i can bid 10k for next coe hor??

then sell my COE to those who need at a higher price?

does it work this way ?

[victorp]

Here is a very good analysis of the Motorcycle conundrum of which we are facing currently

 

http://www.channelnewsasia.com/news/singapore/is-speculative-trade-in-motorcycle-coes-helping-to-push-them-to/3660820.html

 

- CNA/fr

 

Thanks for sharing. I had been saying this for more than a year and no one gave a **** to what I said. Haha.

 

Finally.

[victorp]

yeah , you got that right,

now waitng for them to increase their interest..

 

now COE is transferable , wa if i got 200k now

i can bid 10k for next coe hor??

then sell my COE to those who need at a higher price?

does it work this way ?

 

Yes and no. Yes you can profit is you do a transfer but you need a company as last check is cannot transfer between 2 individuals.

 

And no, you cannot profit because we will look for you and kill you before you sell. Hahahaa. Just kidding.

[MR BIKER]

GOOD article. I know, dr t knows it. only LTA dont know it