The waiting game

The high COE prices have sent ripples through the car trade here in the last few days. What now for the beleaguered car trade you might ponder - will people still buy cars or will the dealerships run out of business?

Well, no, the dealerships will still be in business but sales will most definitely slow down - this is something everyone has already expected in the weeks and months prior to the spike in prices this week thanks to the prediction of the LTA reducing the COE quota this year. The latter came true and sent some car buyers into frenzy. Put it this way, if you know that an item that you want will be a limited edition soon, you obviously rush to get it first before demand far exceeds the meager supply.

We all know from past experiences that car buyers will still shop and buy despite the mad COE prices. Remember the mid-1990s when a COE will set you back six-figure money? Demand for cars was still there back then, so actually $42k is not that bad compared to some situations in the past.

Sure, it doesn't sound like it makes sense to buy when now a Kia Picanto costs as much as a Kia Cerato Forte was a while ago. Sales of small and lower end cars will definitely suffer but if you're looking at buying a bigger car then the pinch won't be felt as much.

For those who need or want to buy a car now or soon, it's just too bad that they've missed the under $20k COE honeymoon period. Industry sources we spoke to since Wednesday have all told us that COE prices will continue to rise. Nobody's certain how high it can go but up to $60k might be a possibility. A sales manager for a Continental brand added, "It will be cheaper now then waiting. If you look at the figures, the COE quota for the next bidding exercise is already much less than the unsuccessful bids from last Wednesday." Nobody knows when prices will eventually drop too although towards end of the year might be a good guesstimate. So car buyers out there - if you need to buy, buy now or wait till towards the end 2010 when prices should stabilize.

Credits: Story by Raymond Lai