Private rental companies deny aggressive offers for COEs and drive up premiums

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The statements come after some netizens blamed these companies for the eye-watering bounties: The most recent auction results on July 6 saw the open category hit S$110,524, breaking a nearly three-decade high, as bounties increased in all areas.

“The big buyers are the car rental companies who push the requirements! They must be separated!” one user wrote in the Facebook comments section of an ANC follow-up report on WCC awards.

Another Facebook user predicted that COE bounties would continue to rise because “most” of the bidders were car rental companies. “Now the rental car business is good because most PHV (private rental vehicle) drivers can’t (afford) to buy, so rent,” he said.

UBER’S AGGRESSIVE COE OFFERS

Such comments were not unprecedented.

In May 2016, the open category premium closed at S$49,700, and although this was down from previous prices, observers pointed out that it could have been lower had it not been for the offers. aggressive policies of Lion City Rentals, then owned by ride-sharing service Uber.

According to a Straits Times article that month, Lion City Rentals submitted 870 bids in the three COE car categories and was successful in all but 30 of them. In the previous tender two weeks ago, the company had won all of its 90 bids in the open category.

Transport analyst Walter Theseira of the Singapore University of Social Sciences told CNA that Uber was trying to expand its fleet at the time “at all costs”.

“They weren’t particularly concerned that their rapid expansion was actually driving up (COE) prices,” he explained.

“That’s because, as we know, Uber had plenty of funding that allowed them to make those decisions without worrying so much about cost.”

Associate Professor Theseira said he had heard anecdotally that private hire companies were now interested in expanding their fleets, although he acknowledged he had no actual numbers. The Land Transport Authority (LTA) has stopped disclosing the identity of COE bidders.

“When you look at the landscape in Singapore, it makes a lot of sense because many of these suppliers would have actually reduced their fleet significantly during COVID, or they would have let their older vehicles expire without renewing the COE,” he said. declared.

“We’ve also seen that since the COVID restrictions were lifted, there’s now excess demand for private hire cars and taxis. And it also appears to be quite reasonable in demand for shared hire car mobility.”

Figures from the LTA show there were 71,147 private rental cars – including self-driving and chauffeured cars – at the end of 2020. This figure fell to 67,990 at the end of 2021 when the pandemic was in full swing. full, and soared to 68,395 by the end of May this year.

TOO HIGH COE PRICES FOR FLEET EXPANSION

Motorway Group’s Mr Lim agreed there was a growing demand for private hire services, attributing it to convenience as well as the easing of COVID-19 restrictions.

But Lion City Rentals, which says it has the largest rental car fleet in Singapore, will only consider expanding its fleet and bidding for more COEs next year, Mr Lim said, pointing out that high premiums would also increase rental prices.

“Drivers can’t afford the prices, the cost is too high,” he said, adding there was still time to expand the fleet as its current cars were around five to six years old.

Lim said Uber’s situation in 2016 was different, as premiums were only around S$50,000. “Now it’s S$100,000; impossible to compare. It’s almost double that,” he said.

Ultimately, Lim said the low COE supply contributed to higher premiums. “It’s not about bidding. The supply is getting smaller and smaller. I think August will be worse,” he added.

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