COE prices held steady this round. Cat A didn't budge an inch, and Cat B and E premiums registered small, identical $301 dips.

Last issue, CarBuyer mentioned the significant lack of buyer interest as the main reason premiums fell for April's first round of bidding, despite the reduced overall COE quota.

Disinterested buyers still feature largely for this round of bidding. The subtle movements in premiums suggest a healthier state of affairs than is actually the case (meaning that prices are being propped up by factors other than demand).

One of these possible factors for prices holding steady for this second round, is the still relatively healthy order bank.

Market forces have a significant effect on determining COE prices, but that doesn't mean that car companies have no power to influence them.

One way larger dealers ensure that COE prices go more or less where they want them, is to maintain a big order bank.

More orders mean more clout with regards to influencing prices, whilst bidding for COEs.

Another factor that could have contributed to the stability of prices this round are more favourable exchange rates with respect to cars from Japan.

This means dealers have more margins to play with and can put in stronger bids for COEs. The other reason could be the increased activity from parallel importers (PIs).

A manager for a major Japanese brand explains that PIs have a stock availability advantage over main dealers regarding certain popular models.

Lower costs also mean that they can put in more aggressive COE bids. He adds: "PIs are fairly active in Cat E now."

Still, the dealers we spoke to were in agreement that the current primary activity in the market concerns the clearing of backlogged orders by main dealers.

This is all well and good, but also implies that there are no new buyers coming in to replace cleared orders - bad news for the trade.

The fact that the three largest players, Toyota, Nissan and Hyundai, all dropped prices is very telling as to the depleted state of the order backlog. For example, after holding them steady last round, Toyota slashed prices on models like the Altis by $1,000.

Other models like the Camry sedan and Fortuner SUV had $2,000 knocked off their list prices. Nissan and Hyundai made similar price cuts.

Dealers don't cut car prices unless they see significant weakness in the market. With little by way of really exciting new products, they seem to have gone into safeguard mode. This means protecting that dwindling order backlog by going all out to stir buyer activity.

According to the sales manager for a European marque, all the recent launches "seem to be quite niche".

He foresees the next impactful event not occurring until "at least the launch of the Camry later in the year".

Echoing these sentiments, the manager of major Japanese brand says: "there's nothing exciting in the market right now."

As most people who needed to change cars "have already changed", he expected premiums to weaken even more than they did, to compensate for the scarcity of car buyers.

The situation is furthered worsened by high interest rates, which are likely to be further deterrent for potential buyers.

With the present paucity of interesting cars, and a lack of attractive pricing, there is little to entice existing owners to switch to a new model.

In our source's opinion, the only way to jump start real buying activity is to entice customers with major monetary incentives.

This could be either in the form of big price cuts from the dealers, or changes to the tax scheme that would reduce upfront costs even further. Preferably both.

That said, price cuts are still price cuts. Those made by the three major players, Toyota, Nissan and Hyundai at least, should generate a measurable degree of buyer interest.

Finance companies seem to be getting in on the act, too. DBS recently launched an enticing finance package that involves some major upfront cash rebates. This combination of attractive financing schemes and price cuts could tickle premiums upwards, or at least keep them constant, for the next round of bidding.

Category A Apr 2nd tender
52-week high: $18,101
52-week low: $8,009
Quota: 2,225
Bids: 2,762

DESPITE THE SIGNIFICANT drop in the number of bids for this round, the premium for Cat A remained rock steady. This could point to a drop in speculative bidding, meaning that it's mostly the bidders with serious intent to register their cars who are participating.

The order backlog that appears to have been propping up Cat A prices over the last few bidding rounds also seems to have reached an equilibrium with respect to the reduced COE quota. That said, Toyota dropped prices by $1,000 to stimulate demand, which could have some effect on next round's bidding.

Category B Apr 2nd tender
52-week high: $17,701
52-week low: $9,001
Quota: 1,086
Bids: 1,299

CAT B PREMIUMS dipped slightly by $301 to close at $13,101. Like in Cat A, the number of bids dropped quite significantly but the premium didn't plunge. Borneo has also dropped prices of Cat B models like the Camry and Fortuner by $2,000, strong evidence that the company expects weak demand to continue.

On a brighter note, the recent launch of the new Kia Magentis could help keep premiums buoyant. The round of price cuts are likely to spur some interest, but don?t expect much to change for the next round of bidding.

Category E Apr 1st tender
52-week high: $18,000
52-week low: $9,275
Quota: 1,119
Bids: 1,657

CAT E PREMIUMS matched the fall in Cat B's exactly. CarBuyer reported way back in issue 45 that Cat E COEs were becoming less popular with respect to securing Cat A cars, as the difference between the Cat E and A premiums was becoming increasingly marked. The majority of Cat E COEs are now being used to secure Cat B orders.

The Cat B market has seen some activity in recent weeks, with the launch of the Nissan Sylphy amongst others. Orders for the IS 250 and Honda Civic continue to remain robust, with a hefty order book for the latter in particular, so no real surprises should lie in store for the next round.