The COE price for small cars has dropped to its lowest level in
four years.
Results of the first open bidding exercise for July showed a fall
of $1,177 to $16,112. This is the lowest since June 2001 when it
crashed to $101.
In the other categories, the COE for big cars was up by $500 to
$15,501, while that in the Open Category fell by $800 to $17,199.
COE for goods vehicles and buses was $6,524, up $423, and for
motorcycles $752, up $51. - CNA
Given the slump in COE prices, it may seem to make more sense to
buy a new car than a pre-owned (used) car...but is that really the
case? In my view, there are two ways of looking at this:
1) Lower COE prices means new car prices are lower. Hence, buying a
new car seem to make more sense as the difference with used car
prices are relatively smaller now. E.g. A brand new Toyota Corolla
Altis will only cost $60,388 now while a pre-owned late-2003
Corolla is still going at $55k-$60k!
2) However, lower COE prices also means lower COE rebate values if
you intend to get rid (either resell, scrap or export) before the
end of it's 10-year lifespan, which you most probably will!
E.g. a CAT A COE obtained at the current $16,112 level will only be
worth $11,278 after 3 years while a COE obtained at $33,009 in
Jul'02 is still worth $23,106 now. Of course, this also means that
you have 'lost' more in absolute terms if you had obtained your COE
at the high prices in 2002 and will continue to 'lose' more on a
yearly basis.
Also, under the new PARF system, the PARF value of your new Altis
will only be 82.5% of OMV ($13,750) in 3 years time, compared to
97.5% of OMV ($16,912) for a 3 year-old Corolla.
What all these means is that a used car is likely to have higher
'paper (scrap) value' although this is due to the higher price paid
for the car in the first place. In any case, the depreciation for a
used car is still lower than that of a new one which depreciates a
lot in its initial years! The absolute cost of a used car will also
be lower than that of a new one although this is offset by the
higher interest levied on used car loans.
So, different strokes, different folks. Whether to get a new or
used car depends on one's own situation. Comments? 