Comments - COE Quota and Trends 2023

You can say anything you want, but if you want to be saying anything near relevant, you need to have facts to back up what you are saying.

As a background reference, it is always interesting to note the history of PQP paids cars on the road.

In 2022, 2017 cars with 5-year PQP paid will need to be de-registered.

Cat A - 13643, Cat B - 8104, Total = 21,747

In 2023, 2018 cars with 5 year PQP paid will need to be de-registered.

Cat A - 14781, Cat B - 6893, Total = 21674

To note - in the couse of its 5 years PQP life, the cars could have already been de-registered due to damage or some other reasons.

POTENTIAL DE-REGISTRATIONS INDICATES QUOTA SIZE

Then it is fundamentally necessary to look at the car population by age on the last day of 2022 and 2021.

At the end of 2020, there were 18677 vehicle reaching the end of its 1st COE life.

At the end of 2021, market size was Cat A 19,357, Cat B 25,879, total 45236

At the end of 2021, there were 13290 vehicles reaching the end of it 1st COE life, 10991 vehicles could have renewed its COE in 2021 to start its 2nd COE life.

COE renewal ratio was 10991/18677 = 58%, 7686 vehicles were de-registered because it reached the end of its 10-year COE lifespan.

As noted, in 2022, 2017 cars with 5-year PQP paid will need to be de-registered. Cat A - 13643, Cat B - 8104, Total = 21,747

7686 plus 21747 = 29433

At the end of 2022, market size (based on registrations) was Cat A 13,811, Cat B 16,661, total 30472

Wow wow wow !

At the end of 2022, there are 10969 vehicles reaching the end of its 1st COE life, 6196 vehicles could have renewed its COE in 2022 to start its 2nd COE life.

COE renewal ratio was 6196/10989 = 56%

So what do we think the market size for 2023 could be ?

If we take a conservative 50% of 10969 vehicles renewing COE in 2023, we will have 5435 vehicles going to the scrap yard.  Adding 21674 vehicles (5 year PQP renewal in 2018), we have a potential market size of 27109.

The LTA disrupted the market by changing average of 3 months to average of 6 months and then to average of 12 months now.  This will slow down the slowing down, but as de-registrations are going to be lower in the entire calendar year of 2023, the slow down will set in second half of 2023 and beyond.  Even when de-registrations start to expand in the 1st half of 2024, the market will be set back by this method that will even out the expansion of the market in 2024.

That is a double whammy to me.  Good for government revenue, bad for car buyers !

My conclusion for 2023 are as follows.

1. Market size will definitely be smaller than 2022, market size (based on registration at the end of 2023) will be about 28,000.

2. The expansion due to LTA adopting a 12 month average will cease from 3rd Quota period of 2023.

3. The LTA may expand 12-month average to 18-months in the second half of 2023, reducing fluctuations in the COEs available in each quarters.

4.  Premiums are set to hover closer to the 90k mark for Cat A and 120k mark for Cat B.  The gap is expected to widen as there will be noticeably lesser COEs at each bidding.