Yet again COE prices for cars have shot through the roof (disclaimer: my car is still new, seven months old, so I'm not looking for a new one).
Hey, people, it's possible to beat the COE system because the LTA has built in the means to do so. It's like the political system -- it's possible for the opposition to capture GRCs because the designers, while not making it easy, did not make it impossible to do so.
It is the people's own fears (and kiasu/kiasi mentality in the case of the COE system) that has made "beating the odds" seem so insurmountable.
COEs in any category can actually be secured for $2, yes, $2.
[For non-residents: In Singapore, one has to bid for a Certificate of Entitlement (COE) before one gets to buy a car. The cost of this COE and vehicle taxes make cars here very, very expensive, depending mainly on the COE which in turn ostensibly depends on supply and demand factors.]
I will not go into the details of why I say $2 COEs are possible, since my earlier posting (3 Nov, 2010) has done that. In this posting, I just want to point out that it requires potential/aspiring new car owners to really understand how COE bidding works, and to organise themselves into an interest group perhaps via social media (initially at least; the motor firms will then come around when they see that it also benefits them to have stable, low-cost COEs).
OK, briefly, $2 COEs are possible because the minimum bid sum is $1. But the way the system is designed, assuming everyone bids $1, all the COEs go to the next round since there is no price-setter.
You need a price-setter: the $2 bidder, or, as is the case now, the guy (or guys) who bid such that he/they and all others who bid at and above this magic sum get the available COEs.
The suckers are those who bid below this magic figure, and this figure can be $2 or $2 million or whatever.
Right now, everyone (meaning typically the dealers who bid on behalf of the buyers) work on the kiasu/kiasi mindset, or "beat the other guy to it". So, if a dealer thinks most bids will be around $50,000, he will try to bid above this figure (the actual permutations are more nuanced, but this is the gist of it) for his customer. How "above" depends on these options.
To secure $2 COEs, the mindset has to change, with some kind of people-driven (haha, my pun) initiative to take a queue number for successive rounds of bids.
Come on, you'll eventually get your new car, even if you wait several months -- for a $2 COE!
Say, there are 600 Category A COEs for this coming round. People must organise such that there are only 601 bidders. The "sucker" is the $1 bidder because he does not get a COE this round. But the people-driven initiative must be made such that this sucker gets to bid $2 the next round and someone else becomes the sucker.
In this round, then, exactly 600 people bid $2, become the price-setters and get their COEs. Or, if you wish, only one person bids $2. The other 599 can bid anything from $3 to everything they own, including the kitchen sink. All will still get their COE at $2.
Just as important, car loans will be manageable, which means the losers are the banks and other lenders. You wanna sympathise with them instead?
Detracters will claim that $2 COEs mean that car resale prices, now affected by much lower tax rebates, will be much lower. This is true but was this not the case before the COE system was introduced?
And the authorities still get to keep the overall car numbers in check, albeit at much lower tax revenues. But the people benefit, right?
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Postscript: Thanks to "Anonymous" for that comment -- "Is there a back door?" -- with regard to yesterday's posting. It's a good one!
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