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Certificate of Entitlement (COE) premiums for motorcycles closed at S$5,002 in the May 4 bidding exercise — a 58.9 per cent drop from the S$12,179 premium in the last bidding exercise in April.

This comes in the wake of new measures announced Apr. 21, adjusting the bid deposit from S$800 to S$1,500.

The validity period for motorcycle temporary COEs (TCOE) was also cut from three months to one month.

COE premiums for for most other categories also fell, albeit less sharply.

Premiums for Category A vehicles fell from S$103,721 to S$101,001, while premiums for larger Category B vehicles fell from S$120,889 to S$119,399.

Prudent bidding

According to the Land Transport Authority (LTA), the changes aim to "improve allocative efficiency".

This is not the first time the bid deposit has been adjusted.

Last March, after the COE premium hit the five-digit mark for the first time, LTA adjusted the motorcycle bid deposit from S$200 to S$800 to encourage prudent bidding.

It also shortened the validity period of the TCOE from six months to three.

According to The Straits Times, those measures were implemented to mitigate concerns that dealers were speculatively bidding for TCOEs.

This might have led to rising premiums. And as buyers often take loans from dealers, higher prices as a result of costlier COEs would translate to higher earnings for dealers, ST reported.

Dealers who ended up having to forfeit TCOEs would lose their deposits, and a higher deposit would hence serve to disincentivise speculative bidding.

Top image via Kirill Petropavlov/Unsplash