Why ARF and COE Will Not Change Anything

2017 was supposed to be so darn good! We were looking forward to a slew of models announced for MY2017 from the lion’s share of the motorcycling world. Rumours abound models were being killed off for not being able to meet the latest Euro regulations have spelled the end for many of our favourite models and of the gradual phasing out of the Victory motorcycles brand. The casualties are not ending yet, pending press releases to confirm the rest of them. Sad but true. Then, it was supposed to be exciting because there is just so much more to expect. Many new models are expected this year. The Japanese manufacturers are looking to continue their new energetic charge in bold concepts that hit production lines. Harley Davidson’s MY2017.5 (read, point five) model, the Street Rod is coming to our shores soon, along with the fact that they will be releasing 50 ground-up new models over the next few years.

One Motoring COE
COE for March as on One Motoring (Screenshot from One Motoring)

What could dampen things then? Well in late February, with the 2017 Government Budget for little Singapore, the motorcycling community got the Three Tiered ARF rudely shoved in our faces. It was like taking a foot to the face at 6:59AM in the morning when the alarm is set at 7:00AM. The announcement felt like a stab in the back and like a nasty allergy we reacted with at least 2 petitions. Adding shed loads of salt and rubbing alcohol to the wounds all through March, just as we thought the worst was over, were the two spikes in COE. Well, not just spike. Let’s put it this way, that the COE for motorcycles went on ‘roid rage not once but TWICE. Yes, it’s abhorring, dastardly, evil, scheming. But, let’s take the time to remember 2 things.

arf-tiered-system
Remember this sucker? The ARF release in LTA’s Press Room

A) It’s driven by demand. Yes, just like any supply/demand model, it behaves the same way. Higher demand raises the prices, less and the prices do the same. Did ARF help? No. In fact, it probably triggered a slew of panic buying by consumers in anticipation of sky-high prices, while dealers scrambled to absorb the costs leading to the spikes in COE prices.

B) Dealers are not to blame. I’ve heard a few bikers here and there come out cock-sure that a concerted effort across the dealers to bid low will drop COE prices, or rumours that a certain dealer is hoarding COEs for himself to ensure his sales. Well, certainly no one can confirm these to be truths or they wouldn’t be rumours to begin with. The conditions for COE bidding are stated on LTA’s website right here. All the dealers have done so far are sell motorcycles and meet consumer demand. It is a way of livelihood and it feeds their families. No sale = no income = no salary. Just like we too do our very best to feed our families. No, the dealers are not to blame for the very reason they exist. We’ll never get our 2 wheeled fix without them.

How is COE bidding done.jpg
Screenshot from LTA on the COE bidding process

2 thoughts on “Why ARF and COE Will Not Change Anything

  • April 5, 2017 at 12:21 pm
    Permalink

    I totally agree with the first principal that if the buying don’t decrease the cost of the COE won’t decrease. However, because Motorcycle COEs are transferrable and the deposit is a mere $200, dealers will ensure that they have COEs in hand in order to sell. Therefore with that in mind, would you as a dealer bid as high as you can to secure some? If people buy, good, bid for more. If people don’t buy, can wait for 6 months then $200 deposit forfited. Anyway when it comes to the sales price, it’s always quoted with the COE price, so the cost is naturally transferred to the consumer.
    Regarding absorbing of cost, I take that with a pinch of salt. Earn less in order to increase sale, most likely. Salesman talk.
    Botton line is unless the price of COEs are seriously affecting sales, it will not drop.
    The dealers are not purposely driving the COE prices up but they need it in order to sell.

    Just my few cents worth of comments, if I’m wrong, pls provide something right so I can learn and apply.

    Reply
    • April 5, 2017 at 11:56 pm
      Permalink

      Hi Melvin, opinions are fine. they create healthy discussion. Yes the consumer is unfortunately the one who has to cover all the costs. When dealerships “absorb” any costs and especially COE, it comes out of the mark-up and profit they would otherwise be making. The intention of the COE is to decrease sales by deliberately imposing a form of “tax” that adjusts according to demand. Hence you can see just how effective the system is in the short term. Not the long term if prices surge beyond 10K that many dealers are afraid of. We will still need or want our motorcycles and have to stomach the insane figures in due course unless the COE system is removed. In essence the dealerships bidding higher and higher to ensure they can get COEs, that is driven by a basic need for sales so earn a living. That’s why the COE system, which is the root cause of the soaring prices, is so effective at generating a source of income for the establishment that put it in place while the dealers and consumers are forced to follow the path that it sets, no matter the price.

      Reply

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