Industry Trend Analysis - Greater COE Availability Will Prevent Market Contraction For Now - JAN 2018

BMI View: T he availability of more COEs will prevent the cyclical downturn of Singapore ' s automotive market from driving down commercial vehicle registrations into a contract ion in 2017 ; however, in 2018 the market will continue with its contraction which will negatively impact commercial vehicle registrations.

In May 2017, Singapore's Land Transport Authority (LTA) increased the number of available Category C Certificates of Entitlement (COE), which represent goods vehicles and buses, from May 2017 to June 2017 due to the large number of de-registrations that took place in this segment in the first four months of 2017 (4M17). This increase in COE supply has driven down the cost of Category C COEs and stimulated 4.2% y-o-y growth in commercial vehicle registrations for the first 10 months of 2017 (10M17).

We have therefore revised up our growth outlook for Singapore's commercial vehicle registrations for 2017 from an 18.0% contraction to our new forecast of 3.0% growth. Furthermore, for 2018 we have revised down our forecast from our previous contraction of 28% to a 30% contraction (our new forecast). This downward revision for 2018 is because the increase in registrations in 2017 will only delay the cyclical downturn of Singapore's commercial vehicle segment and it will take effect once again in 2018. This means we now expect commercial vehicle sales to average an annual contraction of 7.8% over our 2017-2021 forecast period.

Cyclical Downturn Will Recommence In 2018
Singapore - Commercial Vehicle Registrations
f = BMI forecast. Source: LTA, BMI

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