(Image: CNA) SINGAPORE: Proposed changes to the Certificate of Entitlement (COE) system could reshape the used car market, with industry players saying that some mass market vehicles may lose resale value while pre-owned luxury cars could become more attractive to buyers.
The Land Transport Authority (LTA) has proposed merging categories A and B, which classify cars by engine size and power, into a single COE category, and introducing fees and rebates for different car models based on their open market value (OMV).
Under the proposed fee-and-rebate system, the maximum price difference between a higher-end car and a mass-market car would be S$30,000 (US$23,000). Car dealers told CNA that this could change the price gap between new and second-hand vehicles.
For mass-market models that stand to benefit from such rebates, lower prices for new vehicles could put pressure on the resale value of comparable used cars. "Consumers are all competing within the same market," Mr Benjamin Loo, chief operating officer of CarTimes Automobile, said.
"If a consumer is able to buy a brand-new vehicle for S$15,000 less, they might reconsider buying a one-year-old pre-owned vehicle. Dealers will have to remain competitive because it does not make sense for a used vehicle to be priced the same as, or higher than, a brand-new one." Existing owners of newer mass-market cars could also face lower trade-in values if cheaper new vehicles put downward pressure on used-car prices, Mr Loo said.