COE Projection in 2025 to 2026

Overview of COE Pricing Trends

Certificate of Entitlement (COE) pricing has been on the rise, even with the increase in quotas. This trend can be attributed to several factors, primarily the influx of affordable Chinese electric vehicles (EVs).

Factors Influencing COE Pricing

• Increased Demand: The growing popularity of EVs, particularly those from China, has led to higher demand for COEs.

• Supply and Quota Dynamics: While quotas have increased, the demand surge has outpaced the supply, contributing to higher prices.

• Market Competition: The introduction of cheaper Chinese EVs has intensified competition in the automotive market, influencing COE bidding behavior.

• Consumer Preferences: As consumers shift towards more affordable and environmentally friendly options, the demand for COEs remains robust.

Impact of Chinese EVs

The entry of inexpensive Chinese EVs into the market has created a significant shift in consumer choices, leading to:

• Price Sensitivity: Consumers are more inclined to bid higher for COEs to secure these affordable vehicles.

• Market Disruption: Traditional car manufacturers may find it challenging to compete with the pricing of Chinese EVs, further driving demand for COEs.

Distributor Bidding Behavior

Distributors, rather than consumers, are actively participating in COE bidding due to:

• Better Margins: Distributors are benefiting from higher profit margins on Chinese EVs, allowing them to bid competitively for COEs.

• Strategic Positioning: By securing COEs, distributors can ensure a steady supply of vehicles that meet consumer demand, even as prices rise.

Conclusion

The interplay between increased quotas and the influx of affordable Chinese EVs has led to a complex situation in the COE market, where prices continue to rise despite an apparent increase in supply. Monitoring these trends will be essential for understanding future market dynamics.