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CAR sales have been rolling downhill and the brakes do not seem to be working.
In the first seven months of the year, authorised agents and parallel importers put 27,910 new cars on the road - 38 per cent fewer than the same period last year, which itself suffered a 30 per cent sales shrinkage compared to 2008.
With certificate of entitlement (COE) supply for the August- to-January 2011 period being 10 per cent lower than that in the preceding six months, things can only get worse for car buyers and sellers in the next few months.
Looking even further ahead, COE quotas are likely to continue heading south, as supply is largely determined by the number of vehicles taken off the road.
That figure has been slowing down - or, more accurately, returning to a more normal state.
The trend is expected to continue up to 2013, when cars that are between three and five years old today reach "scrappable" age.
Hence, motor-industry players foresee a surge in deregistrations in three years' time, which should then trigger an abundant supply of COEs.
Right now, though, the industry will have to tighten its belt and sit out the "famine". Some companies have started downsizing, and many more will follow.
Meanwhile, there have been angry voices among motor traders in recent months.
"Why should we pay for their mistakes?" asked one car dealer, referring to the adjustment for an oversupply of 17,000 certificates in the past two years.
The frustration is understandable. Then again, not many in the industry complained vocally during the years of over-supply.
Nevertheless, were there mistakes that could have been corrected earlier? Possibly.
After 20 years of having the COE system, the Government has realised that the 3 per cent annual cap on the vehicle growth rate set in place since 1990 is no longer tenable.
Hence, from COE quota year 2009, it halved the cap to 1.5 per cent. The rate will be reviewed after three years, and a further reduction (to zero) cannot be ruled out.
The Government has also come to realise that a formula used to work out COE supplies was not "responsive" enough, and had resulted in huge fluctuations in actual vehicle growth rates.
In the last five years, for instance, the car population had grown by as much as 7.5 per cent per annum - much more than the previous cap of 3 per cent.
Hence it moved to a new formula this year - one which metes out COE supplies in six-monthly instalments, based on deregistrations of the preceding six months.
Are the changes having the desired effect? Right now, it does not seem so, because COE premiums have doubled from prices last year, and consumers have pulled the handbrake on replacing their rides.
This is evident in the deregistration data. In the first seven months, the total number of vehicles taken off the road shrank by 33 per cent to 25,798, while car deregistrations plunged by 46.5 per cent to 15,566.
As a result of the scrappage slowdown, the vehicle population is still busting the new 1.5 per cent growth cap.
As at end-July, the vehicle population stood at 938,922, up 2.9 per cent from the same time last year. The car population was up 4.1 per cent to 578,389.
It might be too early to conclude that the new measures are still not reining in the "explosive" increase in number of wheels on the road, as the new COE quota formula kicked in only in April.
We will have to wait till next year at least to pass judgment.
Incidentally, the COE supply for next year is expected to sink to the bottom of the barrel, before starting to creep up again in 2012. You don't have to be a rocket scientist to know what car prices will be like next year, then.
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