High oil prices has caused a weaker demand of cars around the world, which has impacted the level of certificate of entitlement (COE) prices at home.

Motor traders point fingers at this global trend as it is harder for re-exporters to sell cars overseas and, in turn, tougher for car owners in Singapore to trade in their old vehicles.

'It's a liquidity problem,' said Mr Glenn Tan, chief executive of Subaru distributor Motor Image, to The Straits Times.

'A lot of people can't get rid of their used cars because the worldwide market has softened.'

The effect can be seen on COE prices, which ended yesterday at one of the lowest levels this year.

The COE price for cars up to 1,600cc plunged 11.3 per cent to $12,501.

For cars above 1,600cc, it fell by 9.5 per cent to $12,889. The Open COE, used mainly for cars, closed 5.1 per cent lower at $14,101.

Mr Neo Nam Heng, president of the Automotive Importers and Exporters Association, told The Straits Times that high oil prices have hit demand for big cars the hardest.

He pointed out other factors at play as well.

'Malaysia's closed-door policy to cars from Singapore is one,' he said, referring to a 'trade barrier' which the association has been trying to dismantle for over a year.

Also, markets such as New Zealand and Ireland are imposing tighter rules for used-car imports.

"They have to meet new emission standards and cannot be too old," Mr Neo said.

Land Transport Authority figures also show that sales for used cars have dropped significantly. 2,406 cars were bought in June, the smallest figure this year after the short month of February.

For Mr Alvyn Ang, general manager of multi-brand agent Cycle & Carriage, it felt as though consumers were holding back.

"The mood is cautious," he said to The Straits Times, adding that the Chinese seventh month, which started on Aug 1 and is deemed inauspicious by many Chinese, "does not help".