How Much Are You Willing to Pay for Cat B COE?

[richwang]

Based on popular requests, I am setting up this survey for Cat B COE.

[richwang]

Supply Index for Aug-Oct 2015.

Monthly quota: 2,112
Cat B car population: 281,083

Index = 2,112 x 12 x 10 / 281,083 = 90%

Not a fair deal yet!

http://www.lta.gov.sg/data/apps/news...otaAug-Oct.pdf

[richwang]

Cat B De-registration:

Monthly Average for Jan to Mar: ( 2,095 + 1,474 + 2,416 ) / 3 = 1,995
Monthly Average for Apr to Jun: ( 2,289 + 2,191 + 2,362 ) / 3 = 2,281

http://www.lta.gov.sg/data/apps/news...otaAug-Oct.pdf

[stl67]

Supply Index for Aug-Oct 2015.

Monthly quota: 2,112
Cat B car population: 281,083

Index = 2,112 x 12 x 10 / 281,083 = 90%

Not a fair deal yet!

http://www.lta.gov.sg/data/apps/news...otaAug-Oct.pdf

in view of the 90% index, you think LTA will do a clawback? Quite unlikely right?

[richwang]

in view of the 90% index, you think LTA will do a clawback? Quite unlikely right?

I will need to calculate how to maximize the revenue:

Revenue = Quota x Price

The COE policy can be a wild card ...

[richwang]

If the number of votes is a indicator,

Cat B / Cat A= 8 / 39 = 0.2

Then the demand for Cat B is rather small.

Disclose of conflict of interests: I am not eying Cat B.

[richwang]

Cat B / Cat A = 12 / 39 = 0.3

[richwang]

I am still trying to figure out what is the best way to maximize revenue.

Here are some samples (x24 to annualize it):

Jan 2nd bid S$76,889 x 576 x 24 = S$1,062,913,536
Feb 1st bid S$70,890 x 723 x 24 = S$1,230,083,280
Jul 2nd bid S$58,109 x 929 x 24 = S$1,295,598,264
Aug 1st bid S$60,789 x 1054 x 24 = S$1,537,718,544

As you can see the highest COE price is not the max revenue.

[richwang]

Cat B De-registration:

Monthly Average for Jan to Mar: ( 2,095 + 1,474 + 2,416 ) / 3 = 1,995
Monthly Average for Apr to Jun: ( 2,289 + 2,191 + 2,362 ) / 3 = 2,281

July De-registration: 2,382

[richwang]

in view of the 90% index, you think LTA will do a clawback? Quite unlikely right?

Some good news for you：

From my calculation, it shows INCREASING the COE quota is in the interests of the seller to generate max revenue.

Indeed the quota of COE is NOT really decided by the ROAD capacity.
It is decided by the CAR PARK capacity.

And in the past 10 years, the CAR PARK capacity has increased a lot.

I need further calculation of URA data and the best max REVENUE data to estimate whether the increase should be 50% or something like that.

[stl67]

Thank you.
I also read that Transport Minister mentioned that LTA will not take back the COEs to smoothen the price fluctuation. this is good news for those planning to change car.

[Kelonguni]

Thank you.
I also read that Transport Minister mentioned that LTA will not take back the COEs to smoothen the price fluctuation. this is good news for those planning to change car.

I don't think they will also. Everybody buys and everybody happy until Satellite ERP runs in full force (after next GE I hope). But expect it to be on trial and testing phase by 2018. In the end everybody has car but everybody will park it and try very hard not to use it, and especially not during peak hours to peak locations.

[richwang]

August de-registration for Cat B is DOWN to 1,939.
Need to watch out Uber drivers (who could be earning S$5,000/month!)

[richwang]

Plenty of supply for the next 3 years, anything above 10% is above the 10-year average supply of COEs:

COE expiring < 1 year: 103,548 (17.1%)
COE expiring in 1-2 years: 109,956 (18.2%)
COE expiring in 2-3 years: 97,875 (16.2%)

http://www.lta.gov.sg/content/dam/lt...01-03M-Age.pdf

[richwang]

Car age distribution.

http://www.lta.gov.sg/content/dam/lt...01-03M-Age.pdf

< 1 year： 106，683 （17%）
1 -2 years: 106,546 (17%）
2 - 3 years: 96,338 (16%)

[richwang]

De-registration:
Oct 2,529
Nov 2,634
Dec ?

(This is more than the Jul-Sep de-registation: 2,382 + 1，939 + 2,308).
So COE is heading down ...

[Kelonguni]

De-registration:
Oct 2,529
Nov 2,634
Dec ?

(This is more than the Jul-Sep de-registation: 2,382 + 1，939 + 2,308).
So COE is heading down ...

Wow, everything trending down. Buy car or buy house?

[Arcachon]

2006 Toyota Wish cost SGD 60,000 with COE.

Southbank cost SGD 535,000 for 2 Bedroom @ 958 sqft.

Fast forward to 2016, what is your choice.

Hope this help those who need to decide which to buy.

1,450,000 - 958 Strata 21 to 25 1,514 Sep-15

[minority]

Free?? dont flame me! I am just being a singaporean.

[richwang]

If we look at the peak price period: Jan 2013.

The annualized revenue was: $96,210 x 363 x 24 = $838, 181, 520

[richwang]

And now, the annualized revenue is:

$54,920 x 1,019 x 24 = $1,343,123,520

[richwang]

60% more revenue than the peak price period. So there is no harm for the price to go down further.

[Arcachon]

http://www.lta.gov.sg/content/dam/lt...01-03M-Age.pdf

[richwang]

So we have finally entered into the S$30K+ range.
With 62% are willing to pay >S$30K, the chance of COE price to drop below S$30K is slim.
And if that does happen, the seller's revenue will be impacted. So policy change risk will be high.
The first policy chance could be re-allocate the quota to different years. Five years later, the quota will only be 6.9% (average is 10%). That's something not nicely fit into an Election Year. So some the seller could have a kind of "buy-back" the COE when its price is too low, and release them to the market when quota is low.

[richwang]

Cat B Jan, 2016 de-registration: 3,060.
It is more than the past 3 months' average (about 2,600).
So the supply remains very healthy.

[azeoprop]

When will it be back to 60k for a corolla or sylphy.

[richwang]

When will it be back to 60k for a corolla or sylphy.

Never.
If you miss this round (in 2-3 years), you need to be prepared for 200k Coralla (in the name of car light society.)

[richwang]

http://www.lta.gov.sg/content/dam/lt...g_by_Quota.pdf

Jan + Feb Deregistration:
3,060 + 2,579
(Feb drop is normal due to short month and Chinese New Year - it happened in 2015 as well).