WHAT WOULD YOU call a 'comfortable' price to pay for a car? Or more specifically, what would you call a comfortable price to pay for the right to own a car? If you look at COE premiums over the years, you'll see that prices have varied tremendously, and in the process they've hit stratospheric levels. But today, premiums look to be hovering round about the relatively paltry $16,000 mark.

Cat A premiums rose by $2 in August's first bidding exercise, an insignificant amount in absolute terms but it does point tantalisingly to a steadying of prices. Cat B fell by over $600, not a significant amount by your typical Cat B buyer's standards, but then again this is symptomatic of the prevailing weakness in the replacement car market. Many Cat B car owners are finding that they can only sell their vehicles for less than what they owe the bank for their loans, and the financial burden of topping up for a new car is more than most can bear.

Cat E fell by $200, hitting a new 52-week low. Last issue, we reported that some dealers felt that holding onto Cat E COEs wasn't worth the hassle, factoring in all the complaints they'd get from customers irate at having to pay more.

There also appears to be the increasingly widespread realisation that the rebate when you scrap your car is actually pegged to the prevailing quota premium, not the price you actually paid when you got your Cat E COE. A potential loss that more and more buyers are unwilling to stomach.

Industry sources that CarBuyer spoke to were of the opinion that COE prices have gone about as low as they can go. "The only thing that could significantly make them move is the Government increasing or decreasing the quotas," said one manager who feels that an increase is pretty likely.

The whole point of the COE system is to regulate numbers however, and the prices are left to be determined by market forces. Dealers set their car prices with allowances for fluctuations in COE premiums but, conspiracy theories about the big players rigidly controlling the bidding process aside, typical buyers today seem to be willing to pay roughly only $16,000.

All else being equal, you'd think that lower COE prices would help protect dealer margins, but they've apparently had the opposite effect. A dealer must cover his costs, factor in the expected COE premium and pad the resultant figure in the interest of profit with respect to the sale of any car. If you use a sliding scale, low premiums should in theory have little effect on profit margins. Why are many dealers so glum, though? One theory is that once buyers become used to expecting lower COE prices, they're more willing to adopt a wait and see attitude as opposed to buying in fear of prices shooting up.

Of late, there's been little sign of prices increasing, and therefore, a bit paradoxically, there's been less impulse to buy. Against this backdrop, the absence of new all-singing, all-dancing volume models hasn't helped either.

Dealers can't sit back and cool their heels like the public can, especially those who happen to have substantial inventory to manage. There are also principals to answer to and sales targets to meet in order to fulfil dealer or importer requirements. Weak buyer sentiment therefore forces the spotlight on dealers to lower car prices commensurate with COE premiums. And they can only do this by cutting into their profit margins. As we've been saying for a few weeks now, there's been no better time to get a car.

August, 1st tender
52-week high: $26,801
52-week low: $16,112
Quota: 2,195
Bids: 2,843

PREMIUMS FOR CAT A COEs jumped an inconsequential $2 over the last round of bidding. Big industry players like Toyota and Nissan have substantial backlogs of orders to clear so this might have had some effect on keeping Cat A prices stable.

Buyers have also become very price sensitive, and given the fairly long waiting lists for some of the more popular Cat A cars, it's in most dealers' interests to keep premiums stable. Industry sources that we spoke to consider prices to be pretty much rock-bottom now.

August, 1st tender
52-week high: $27,799
52-week low: $14,002
Quota: 1,112
Bids: 1,318

CAT B PREMIUMS fell by $612 this round to close at $15,889. The Cat B market has been marked by relative inactivity for the last several rounds of bidding, with the negative equity situation that many Cat B car owners find themselves being one major cause.

The continuingly soft nature of Cat B premiums could also be explained by Cat A car owners who, rather than opting to trade up to a Cat B car, continue to choose Cat A cars when it comes time to replace their vehicles.

August, 1st tender
52-week high: $27,500
52-week low: $16,999
Quota: 1,154
Bids: 1,653

CAT E PREMIUMS hit a new 52-week low for this bidding round. This COE has traditionally been stockpiled by dealers who use them for immediate registration purposes. With Cat A and Cat B premiums relatively affordable, dealers that CarBuyer spoke to saw little reason in continuing to keep Cat E COEs in hand.

While this might not affect your typical Cat B buyer, the current near-$500 premium a Cat E COE carries over a Cat A certificate is a sum that the new car buyer in particular would not hesitate to take issue with.