"WHERE HAVE ALL the buyers gone?", is what the trade seems to be asking these days. Last round's premium nosedives saw prices, particularly for Cat A models, getting significant cuts. The fact that this round's bidding only saw a moderate $900 spike in Cat A premiums suggests two things.

Either that buyers weren't impressed by what they saw as essentially a normalising of prices following the spike in activity brought on by June's three-week bounce (May had five Mondays, which meant dealers got an extra week to collect orders until June's first bidding round), and showed this by staying away from showrooms.

Or, buyers did come in, but the price cuts made after last round didn't give dealers much ability to bid strongly for COEs for this round.

Some combination of the two seems likely, as 651 buyers didn't get their Cat A COEs this round, compared with 176 last round.

Also, market leader, Borneo Motors, nudged prices for some of its Cat A models up by $500 over the weekend, but kept them steady after this round's bidding, indicating that the company did experience some degree of increased buyer activity, but doesn't really expect this situation to carry on significantly. In any event, the revision in prices should allow Borneo some extra flexibility in securing certs for next round if buyers do start streaming in.

In general, though, the trade still keeps complaining that there are no buyers. If you read between the lines, what they actually mean is that the majority of sales now seem to come from the "wrong" sort of buyers.

Today the market is big on first-time car buyers, the only real segment that keeps Cat A alive and kicking. The thing is, this segment doesn't constitute a cow that you can keep on milking, and this is because cheapness rules for first-time buyers.

With flexible financing, the ability to own a car for a few hundred dollars a month has opened up a whole new market consisting of people who would never have been able to buy one in the first place, but this hasn't necessarily been a good thing.

For example, according to an industry source, the majority of buyers for a popular Korean compact hatchback take out 10-year loans, and think nothing of putting, er, nothing down, or as little as $1,000.

This is folly, as going about buying a car this way will likely give customers limited options a few years down the road. Such buyers who want to trade up or otherwise rid themselves of their max-financed cars are in danger of finding themselves 'underwater' - that is, the outstanding amount they would owe on such a car would exceed the second-hand or scrap value of the car itself, meaning coming up with a wad of cash to pay the difference, or just sticking it out with the same car.

This negative equity situation means thousands of today's buyers will have to pay to sell their cars tomorrow, and considering that so many of these first-time buyers have to stretch so far to buy some of the cheapest cars on the market in the first place, it doesn?t seem likely that they'll be any position to be able to take the financial hit. So for the car trade, this basically means no repeat business.

That hasn't stopped the dealers from catering to this segment, though. Chinese carmaker, Chery, has just entered the market, and its QQ compact hatchback is likely to attract the same crowd that Kia and Perodua target with the Picanto and the Kelisa, respectively. It's too early to tell how much of an impact Chery will make, but since cheap rules at the moment, it'd be silly to discount it completely.

What about Cat B, then? The trade has acknowledged that thanks to the fact that many existing owners can't sell their cars without having to top-up cash to pay off their loans, the replacement car market is pretty much a dead horse.

Borneo Motors certainly looks less than optimistic, lowering prices for some of its Cat B models by $1,000, namely for some of the slightly slower moving ones like the Fortuner Sports Utility Vehicle and Previa Multi Purpose Vehicle.

The situation isn't expected to change, unless something comes along enticing enough for existing owners to bite the bullet and trade up. And that's why everyone's waiting on the all-new Toyota Camry.

The new car is expected to make a big splash when it's officially launched in September, the general negative equity situation notwithstanding. Local importer, Borneo Motors, has already started taking orders for the car, and with COEs so low now, some hoarding might be on the cards in the near future.

Even if some buyers are waiting in the wings with the money in hand for a new car, whenever the market begins a slow downward creep, many of them shift into wait-and-see mode, and perch vulture-like on the sidelines, watching COEs drop bit-by-bit to see if they can swoop in at the very bottom.

For the next round of bidding, with so little activity going on it doesn't seem like things are bound to change very much. If buyers are scarce now, where are they supposed to come from in two weeks' time?

Category A July 1st tender
52-week high: $17,289
52-week low: $8,009
Quota: 2,216
Bids: 2,867

IT LOOKS LIKE Cat A premiums got a bit of a shot in the arm, following last round's price cuts. Those were spurred by big premium dips across the board, but their overall effect on this round's bidding, a $900 increase, doesn't seem like much to write home about.

The bid ratio (the number of bids divided by the quota) for this round spiked sharply to 1.30, up from last round's 1.08, but the relatively small price increase means that the bids put in weren't of the particularly robust variety. Borneo Motors did up prices though, and when the market's leader does that, it suggests that this Cat will either hold steady or rise a bit next round.

Category B July 1st tender
52-week high: $16,889
52-week low: $9,001
Quota: 1,084
Bids: 1,240

CAT B CONTINUED its downward spiral, losing $200 on top of last round's sizeable near-$1,200 dip. The bid ratio actually dipped slightly this round, to 1.14, as compared to last round's 1.15.

We mentioned last issue that the big car end of the market was stagnant, with bidding action confined to clearing of existing order books. For the next round, with nothing significant on the horizon, at least not until Toyota's Camry officially goes on sale, don't expect things to change.

Category E July 1st tender
52-week high: $17,999
52-week low: $9,275
Quota: 1,147
Bids: 1,678

CAT E PREMIUMS once again mirrored Cat B's, so the evidence that Open Cat COEs are currently being used interchangeably with Cat B ones is mounting. As the price moves closer to Cat A premiums, Cat E could even begin to act as a stabiliser, helping to take away upward pressure on Cat A prices.

For the next round, though, with no exciting new cars to spur demand for immediate registrations, the traditional purview of Cat E, there's no reason to see why Cat E won't continue to move in lockstep with Cat B.