Not to blow our own horn or anything, but COEs took a sharp swing upwards this week and regular CarBuyer readers will have known it was coming (see 'Three Reasons Why The COE Market Is On The Up', last issue).

After hovering around the $10,000 mark for much for the year, certificates for cars below 1.6-litres and taxis (Category A) climbed $1,096 to end bidding at $11,199. Category B COEs (for cars above 1600cc) surged $2,066 to $12,555, breaking above the $12,000 level for the first time since early December.

Two main reasons were at play, according to trade sources we spoke to. The first one was fairly visible: showroom traffic has been on the rise, with salesmen looking more cheerful than in the early part of the year thanks to a pick-up in buying.

Increasingly, car buyers are shopping with a sense of urgency because many know that the COE pool is about to shrink, now that a new quota year is just around the corner. That being the case, salesmen are clinching sales by playing up the notion that COEs are sure to rise, so if you're buying, you'd better buy now. Sign here, please.

"There's a sort 'fear factor' going around. Last weekend salesmen told customers that COEs were going to rise, and sure enough they did," says the marketing manager of a large dealership. That makes it sound as if the industry manipulated customers into panic buying, but the truth is that many shoppers (hopefully CarBuyer readers!) probably figured it out on their own. "Customers are smarter these days," says our source. "Many of them can read the market just as well as us."

Whatever the case, last issue we wrote that "if enough buyers reckon that COEs will be pricier in April than in March, they'll do their buying earlier, only to end up pushing prices higher themselves", and that seems to be what happened this week.

According to the trade, another, less visible factor also played a part. It's complicated, but it goes like this: some dealers collected orders in the early part of the year for cars they can only deliver later, say in May, June or beyond. With Budget Day last month possibly containing a juicy tax cut for cars registered with, say, a March or April COE onwards, these dealers held back their bids in case they secured a February (i.e. pre-tax cut) COE and then had to explain to angry customers why their car delivered in June was registered with full taxes.

Of course, no such tax reduction came along, so that released these dealers from holding back their bids, and the effects on their entry to the market are pretty plain to see.

Most car dealers we spoke to expect the market to embark on a slow, steady rise from here, with demand for COEs on the rise again, and COEs themselves about to become more scarce. "I think it'll start to climb from here," says the marketing manager we spoke to.

Two factors, however, could derail the COE market's ascent. "If the market rises two fast, that could cool off buying again," says our source. "Second, if those people who really need to get cars do get them, and there's no one left to buy a car, then prices will come back down. Then that could kick off a whole cycle of buying and the whole thing starts again."

If that happens though, it'll be in the longer-term future. Two weeks from now when COE results are out again, the $10,000 COE is probably going to be fainter memory than it already is.

Category A Mar 1st tender
52-week high: $20,654
52-week low: $8,009
Quota: 2,792
Bids: 5,001

Last issue we noted that 'low quality' bids, resulting from buyer response to the $8,009 January premium, had the effect of keeping a dampener on Cat A prices. But the fact that this round drew a smaller number of bids - 5,001 compared with last round's tally of 5,030 - suggests that there were more quality bids this time round.

The post-Budget Day effect we mention above is probably a factor behind the more 'serious' bids, and perhaps there are also fewer speculators taking a chance and submitting bids on the hope of securing a cheap COE.

Category B Mar 1st tender
52-week high: $21,710
52-week low: $9,001
Quota: 1,268
Bids: 1,926

CAT B Premiums saw a strong $2,066 upswing, closing at $12,555 for this round of bidding. A smaller quota and more bids this round no doubt helped contribute to this increase. The healthy number of bids is likely due to buyer activity spurred by February's near record low $9,501 COE, and of course the recent increase in showroom traffic.

BMW dealer Performance Motors could be bidding strongly for COEs as its pre-sold fleet of cars used for the recent Asian Aerospace exhibition will soon be delivered to their owners.

Category E Mar 1st tender
52-week high: $21,999
52-week low: $9,801
Quota: 1,395
Bids: 2,102

After last round's strong performance, Cat E premiums soared further by $2,297 to close at $12,697. Since the bid ratio (the number of bids divided by the number of certificates available) was virtually identical to last round?s, the likely reason for the price spike is that the same number of dealers are simply bidding more enthusiastically for this COE.

However, there's now a near $1,500 difference between Cat E and Cat A premiums, the former being a substitute for the latter in recent times. It looks like the Cat E COEs secured this round will instead be used to register Cat B cars.