CoE - someone please explain.

[PearlJam]

According to a report on the CoE result in today's ST, a car dealer said:

" . . CoE (prices) will dip below $50'000. . . " and 

"When that happens, cars bought between 2011 and 2013 will start to be scrapped - and there will be even more CoEs available."

He said he is already seeing some of these cars being deregistered as vehicles bought with $80'000 - $90'000 CoEs become commercially unviable when premiums are below $60'000 - and heading lower.

 

I cannot understand why and where is the benefit of de-registering the 2 to 4 year old cars in terms of losses on the cars.

Can someone who understands what this is about, please explain? Thanks.

[oceanicmanta]

say bot 2 years ago at a high COE of 80k + dealer's profit 20k. Total 100k.

 

if held for full 10 years, the depreciation per year will be fully realised ie 10k per year.

 

scrap now can get back 80%, which is 64k of COE value, which can be used to offset new car purchase & avoiding the 10k depreciation

 

new COE 50k + 20k dealer's profit, total 70k = 7k depreciation a year.

 

above is a very simplistic example with only 2 variables for illustration.

 

this is cutting loses, to achieve lower depreciation with new car purchased

 

it assumes one is able to replace a car whose price has reflected the drop in COE prices

[Arshavin]

Pearljam

Did any dealer offer to scrap your car for you or contact you? Or what makes you think about the scrap value and the parf value?

I had dealer who call me and say if i scarp my car before 2015, I can get back 75k. But I reject him as I need to pay back the bank loan so I don't gain any money

[PearlJam]

I only had a dealer offering me $1'000 above my paper value if I bought his new C180 (new but registered).

Doesn't make sense for me.

I prefer a C200.

And I prefer to buy direct from an owner as I do not need dealer's financing.