What will affect the overall quota significantly will be the expected increase in deregistrations from 2013 onwards. By that time, the number of cars due to be scrapped will be very high since many cars registered in the bumper years of 2003 to 2008 would have aged eight years or more. COE prices are thus expected to fall from 2013 to possibly 2016.Five years marks the halfway point in the validity of a COE. It is usually the time for vehicle owners to decide what to do with their car.If the vehicle is in good condition, a sensible option is to keep it for another two to three years.
That would coincide with the time when COE prices are expected to fall as a result of a bigger COE quota allocation.
From 2013, the large number of cars sold in the bumper years of 2003 to 2007 will be due for scrapping. Since COE allocation is a one-on-one replacement with a cap on vehicle growth, it stands to reason that a bigger supply of COEs should lead to a fall in bid prices.People who bought their cars with seven to 10- year loans will find it particularly hard to change their car when it is five years old. These owners will still owe money to the finance company and they will have to redeem the loan before buying a new car.As a car approaches 10 years, a decision will have to be made whether to scrap it or pay the Prevailing Quota Premium (PQP). The PQP is the moving average of the previous six COE premiums in Categories A and B. With the current sky-high COE prices, the sensible thing to do is to deregister the car.After the 10th year, the car has zero scrap value and represents yet another financial burden. So unless the car is a classic, which appreciates in value over time, there is little economic sense in renewing its COE.However, if you find it worthwhile to renew it, there is a choice of either paying half the PQP and renewing it for five years, or pay the full PQP for a 10-year extension. Bear in mind that a five-year extension precludes any further extension of the COE for that car.The good news is that if the car is scrapped or exported before the expiry of the COE, a refund will be given by the Land Transport Authority for the unused portion of the COE validity period.