After falling steadily since 2006 began, Category B COEs (for cars above 1600cc) rebounded to close $988 higher at $10,489 for February's second bidding exercise. The Open Category COE premium went up to $10,400, a $1,125 increase.

On the other hand, the Category A COE (for 1.6-litre cars and below, as well as taxis) slipped by $181 to end bidding $10,284. This was a relief for small car buyers who watched it shoot up by $2,275 in the last round, following the record low premium of $8,009 in late January.

So what happened here? More than 5,000 bids were placed for Cat A COEs this round, proving that there is no shortage of orders for small cars. The fact that Cat A COE price fell despite this points to a lack of what the industry calls 'quality bids'.

"Many of these bids can be linked to orders taken in January, after the $8,009 COE," the sales manager of a Japanese brand told CarBuyer. "Many distributors made drastic price reductions, so they still don't have the margins to place strong bids for COEs now."

Toyota distributor Borneo Motors cut prices of popular models like the Vios and Corolla Altis by up to $3,000 then, and proceeded to rake in so many orders that it was forced to raise the prices not once, but twice before the next round of COE bidding.

What this means is that customers who came in later and booked cars at the higher prices would in all likelihood have secured their COEs by now. But while Borneo can put a tick next to these buyers' names in its order books, it is still obliged to submit COE bids for those who bought cars at the lower price levels. Some industry sources suggest that Borneo's profit margin on its mass market models is only a few hundred dollars, so it obviously can't afford to bid any higher than it is already doing.

Borneo isn't the only one in this situation, of course. Nissan distributor Tan Chong Motor Sales has also had a flying start to the year, so whatever these two market leaders do tends to affect everyone else in the industry. As the sales manager said wryly, "It's a two-horse race now. Numbers three, four and five are a long, long way back."

Still, it seems that the car market as a whole is picking up steadily, especially after no vehicle tax cuts were announced during the recent Budget Day speech. "I would rate showroom traffic as quite healthy," said a marketing manager of a major brand. "Many buyers are coming in now because they don't want to risk having to pay more for their COEs further down the road."

Certainly, it could have been the two consecutive rounds of sub-$10,000 Cat B COEs that turned the attention of a certain group of motorists-those who would not otherwise have considered buying a Cat B car-to the new Honda Civic. The car is available only as a 1.8 or 2.0.

One industry insider commented that he believes Honda distributor Kah Motor is bidding for COEs in advance for Civics that are not scheduled to be delivered until the middle of the year. This, he says, will lock the buyers in before the 2.0-litre Nissan Sylphy, a car very similar to the Civic in size and price, is officially launched.

Whether or not this is true, the fact that it's even on the table suggests that creative sales and COE bidding tactics may be the way forward for many brands. Especially so when the new quota year begins soon and the COE pie is likely to shrink then...

Category A Feb 2nd tender
52-week high: $20,654
52-week low: $8,009
Quota: 2,787
Bids: 5,030

DEMAND FOR CAT A COEs remains relatively strong, with a bid ratio (the number of bids divided by the number of certificates available) of 1.80. That's a slight dip over last round's 1.97, which explains the small dip in price, but dealers feel that the bids lack 'quality', meaning they're on the lowish side, probably around $9,000.

If such bids persist, then the price for the COE is unlikely to be able to climb much from here. Quality is just as important as quantity in determining a COE's price, after all.

Category B Feb 2nd tender
52-week high: $21,710
52-week low: $9,001
Quota: 1,274
Bids: 1,866

IT PROBABLY SURPRISED no one in particular that Cat B COEs ending bidding sharply up, at $10,489. After all, last round's result ($9,501) was just half a grand above the COE's 52-week low, and if that didn't get buyers' juices flowing, we don't know what did.

Incidentally, many in the trade suspect the Honda Civic's popularity to be at fault for bumping up Cat B prices. We spoke to the brand manager there, who said the post Budget Day crowd "didn't really affect" them. Then again, the Civic is nearly sold out till October.

Category E Feb 2nd tender
52-week high: $21,999
52-week low: $9,275
Quota: 1,397
Bids: 2,080

COMPETITION for this COE looked much fiercer than last time, with a bid ratio of 1.49 versus 1.28 before. What's interesting to see is that the number of bids for Cat A fell by quite a large number (487), while interest in Open Cat COEs has climbed.

Surely some substitution is happening here, with dealers obtaining Cat E certificates for their customers? The price gap between the two certs stands at just $297, after all, as near as makes no difference.