Guys,
I am on MC today so I was thinking about the high COE problem. I have a solution and I want to hear the feedback and see if there is anything wrong.
The solution is to change the COE rebate amount to the average of the initial price and current price. Example, if I bought my car in 2009 for $10k COE, now if I scrap my car, the rebate amount will be ($10k+$80k)/2 * 70% = 31.5k instead of just $10k * 70%= $7k
The exact ratio 50% bought and 50% current price can be fine tuned but the idea is tie the COE rebate to current COE prices.
WHY???
Because the COE is a totally whacked up market. Normally when prices go up, demand will go down because people cannot afford and SUPPLY will go up as the higher selling price will encourage more people to sell. COE is screwed up because when prices do up, only demand goes down. Supply remains the same or even goes down depending on government policies.
For my solution, EVERYONE WINS!!!
1) The COE seller WINS because to him, he does not really need a car. He just bought a 50k hyndai 3 years back because cars is so cheap. He does not mind selling it for 55k now.
2) The new car buyer WINS because there is more COE quota on the market. Straight away you can help to bring to prices down a little
3) the government also WINS because they have more COEs to sell. They buy back at 50% discount and sell at 100% price.
4) current car owners WIN because the net number of cars does not go up and it encourages those people who don't really need to drive to take public transport.
5) Speculation will be minor because the government buys it at 50% discount and COE by its nature depreciates at 10% per annum so it is REALLY hard to make money unless COE prices go up like 30% a year or something.
6) it also discourages people to sell their COE when COE prices fall limiting fluctuations in COE supply.
This solution will be popular too because everyone wins. It solves the problem of the inefficient COE market. There are many cars out there who have COEs bought at 10k and are willing to sell their COE at 40k. There are many new car buyers who is willing to pay $80k for new COEs. The problem is there is no way for the seller to sell his COE to the buyer. So why does not the government be a middle man and grabbed up all the old COEs at a discount and sell it to the new car buyers keeping 50% as commission.?
EVERYONE WINS??
I am on MC today so I was thinking about the high COE problem. I have a solution and I want to hear the feedback and see if there is anything wrong.
The solution is to change the COE rebate amount to the average of the initial price and current price. Example, if I bought my car in 2009 for $10k COE, now if I scrap my car, the rebate amount will be ($10k+$80k)/2 * 70% = 31.5k instead of just $10k * 70%= $7k
The exact ratio 50% bought and 50% current price can be fine tuned but the idea is tie the COE rebate to current COE prices.
WHY???
Because the COE is a totally whacked up market. Normally when prices go up, demand will go down because people cannot afford and SUPPLY will go up as the higher selling price will encourage more people to sell. COE is screwed up because when prices do up, only demand goes down. Supply remains the same or even goes down depending on government policies.
For my solution, EVERYONE WINS!!!
1) The COE seller WINS because to him, he does not really need a car. He just bought a 50k hyndai 3 years back because cars is so cheap. He does not mind selling it for 55k now.
2) The new car buyer WINS because there is more COE quota on the market. Straight away you can help to bring to prices down a little
3) the government also WINS because they have more COEs to sell. They buy back at 50% discount and sell at 100% price.
4) current car owners WIN because the net number of cars does not go up and it encourages those people who don't really need to drive to take public transport.
5) Speculation will be minor because the government buys it at 50% discount and COE by its nature depreciates at 10% per annum so it is REALLY hard to make money unless COE prices go up like 30% a year or something.
6) it also discourages people to sell their COE when COE prices fall limiting fluctuations in COE supply.
This solution will be popular too because everyone wins. It solves the problem of the inefficient COE market. There are many cars out there who have COEs bought at 10k and are willing to sell their COE at 40k. There are many new car buyers who is willing to pay $80k for new COEs. The problem is there is no way for the seller to sell his COE to the buyer. So why does not the government be a middle man and grabbed up all the old COEs at a discount and sell it to the new car buyers keeping 50% as commission.?
EVERYONE WINS??