Understanding Car Dealers And COE Promises

  • CarVault Insights
  • November 29 2022

Because of Singapore’s limited landmass, the way we buy a vehicle on the island is different than in other countries. In a nutshell, before owning a car, you need to have a Certificate Of Entitlement (COE) that allows you to legally register, own and use your car for 5 or 10 years. It was a system implemented in the 90s to deal with the inevitable traffic congestion in our geographically small but economically fast-paced island. By making COE mandatory for those
who wish to own a car, the number of vehicles on the road can be monitored and non-roadworthy vehicles taken off the streets.

What Is COE Bidding?

Not only do you need to get a Certificate of Entitlement (COE) that’s valid for a certain timeframe, you need to go through a bidding process to procure said certificate. The COE Open Bidding Exercise allows people to bid for the limited COEs in each category. There are 5 categories for COEs: Category A for cars 1600cc and below with no more than 97kW engine power, Category B for cars over 1600cc or those with 97kW engines, Category C for transport vehicles and buses, and Category D is for motorcycle registration. Category E is open: often, if the dealer fails to secure a Category A or B for your car, they take a chance on a
Category E COE.

Individuals can participate in the COE Open Bidding Exercise, which happens on the first and third Mondays of every month at 12 pm. The bidding exercise lasts for 2 days, closing at 4 pm on Wednesday when the bidding results are released. It can be a tedious, time-consuming process, so many potential car owners choose to leave the bidding up to the car dealers.

Understanding Car Dealer COE Packages

Bidding for the COE presents a conundrum for those who want to own a car. Car dealers can sell a vehicle without a COE, in case the owner wants to process the bidding themselves. Owners have a better idea of how much they want to pay in case the bid goes higher than their allotted budget: due to the nature of bidding, COE prices fluctuate depending on the demand and economic trajectory. At the same time, COEs are not exactly assured -- it is very possible to
walk away from a bidding cycle without securing one. This is why car dealers often package the COE with the vehicle you’re purchasing. Here are the
common packages that car dealers offer, depending on how you balance risk versus savings:

No Guarantee COE

Let’s start with the cheapest option. As the name says, this package does not guarantee you a COE, meaning that the car dealer will try to get you a COE for 6 bids -- equal to 3 months of bi-monthly bidding exercises -- but because you did not place wiggle room in your budget to acquire the bid, the risk of losing is pretty significant. The dealer will refund your deposit if they fail to get you a bid after 3 months, but waiting that long only to find that you cannot have your car can be frustrating.

Guaranteed COE at $XX

A guaranteed COE at $XX package says that you’re giving the car dealer a ceiling price that you’re willing to pay should the COE price fluctuate within a certain number of bids. Car dealers may offer a guaranteed COE after 2-bids, 4-bids or 6-bids at the price agreed upon, effectively giving you your car after 1, 2 or 3 months respectively. Note that the guarantee is only for the ceiling price you’ve agreed on -- if the COE prices exceed that, the car dealer will ask you to pay the difference if you want to get your car immediately, or you lose out on acquiring your car.

Guaranteed COE at $XX without top-up

Let’s say you don’t want to deal with the inconsistency of COE prices. Car dealers can offer a package that guarantees you a COE as stated, regardless whether the COE is worth higher or lower than your agreed price. It’s the most uncomplicated option, even if it’s often more expensive than other COE packages. Some car dealers can offer a rebate if the actual COE price falls below the agreed one; make sure to discuss with your dealer if this option is possible for you.

Immediate Delivery

On the other hand, if you absolutely must have the car as soon as possible, you can opt for the immediate delivery COE. In this package, you’re likely to receive a Category E COE, which is transferable and likely stocked by your car dealership. Of course, the price of convenience is a hefty fee but it does mean driving off with your new vehicle in as soon as 7 days. This is the best package for you if you need to get your car ASAP. COE bidding is unique to Singapore so it’s understandable that it looks and sounds complicated.

Spare yourself the headache by securing the services of a reputable car dealer
that can give you the best option for your overall car purchase. CarVault understands that buying a vehicle is not just about the make and model: it’s the whole package. Get the best deals only at CarVault, your one-stop solution for all your car needs.

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