The last time passenger car Certificate of Entitlement premiums were at the level they have now sunk to was in late 1991 and early 1992, barely two years after the vehicle quota system was introduced and COE entered our vernacular.

But as we have said many times before in this newspaper, not everyone benefits from the sharp discounts - primarily because of a pitfall people face when buying a car that comes packaged with a COE.

Last Tuesday, Category A COEs for cars below 1,600cc plunged $6,681 to $5,200, while Cat B for cars above 1,600cc shed $5,998 to $6,002 after some traders held off bidding amid speculation the Budget would include a cut in the Additional Registration Fee. Other reasons given were the holiday period and the revised schedule for February's two COE tenders, both of which were shortened because of the Chinese New Year break.

But most of the people who secured a Cat A or Cat B COE in last week's bidding exercise will not enjoy the full benefit of the premiums diving 50 per cent.

A quick check with major distributors shows COE rebate levels range from $5,000 to $9,000. A COE rebate is the cash a dealer gives to the customer when the COE drops below a set level.

The people who enjoyed the most festive cheer were those who booked a car with Borneo Motors. The customers of the authorised distributor of Lexus and Toyota, Singapore's favourite brand, enjoyed a rebate of $2,998 for a Cat B car and $3,800 for a Cat A car. So for someone ordering an Altis at $52,988 and who secured a COE at $5,200, this sedan - the country's most popular model - will only cost only $49,188.

'We want to be very open and fair to the customer,' explained Gavin Yeo, director of sales and marketing for Toyota. 'We have been offering this scheme all along because we want to tell our customers that our cars are value for money. Our customers are very important to our business.'

He said buyers who did not enjoy refunds were those who required immediate delivery and took up an open category COE, which fell just $795 to $11,804 in the last round.

At Hyundai, however, things were different. Authorised agent Komoco Motors has set the COE rebate at $5,000, meaning it is not legally bound to offer any rebate to customers. On the other hand, Komoco said sticker prices had already been cut before the freak COE results last Tuesday.

'We anticipated there would be a correction in COE premiums so we dropped our prices by $2,000 to $3,000 before the tender,' explained Marcus Ang, Komoco's general manager of sales. 'As a result, the COE rebate was adjusted downwards accordingly.'

He ruled out any goodwill discount, saying: 'Most people are mature enough and they know what they are in for.'

Still, Komoco has since raised its COE rebate to $8,000, Mr Ang said.

Rushing in has its benefits

As with previous sharp falls in COE premiums, the irony is that those who benefit most are likely to be the people who rush in after it happens. This is because dealers usually cut sticker prices after the tender to reflect the new and lower premiums.

So when shopping for a new set of wheels, ordering a car with a packaged COE may not be the smart thing to do. Unfortunately, individuals who want to bid for their own COEs face several obstacles - such as the relatively high $10,000 COE bid deposit and overcoming the conventional sales practice.

In an ideal situation, anyone who wants to buy a car would bid for a COE themselves, not through a dealer acting on their behalf. Only after a COE has been obtained would a person then go look for a car to buy - one with a sticker price that reflects its actual cost, the relevant taxes and the agent's profit margin.

If this were the case, the experience of shopping for a car would be akin to picking out a luxury item like a nice watch or mobile phone, both of which have prices that fluctuate only with taxes, inflation or fashion. And the total amount you pay would be the real cost - nothing more, nothing less.