In an exceptional twist to the second open bidding of November's COE prices, the COE premium for the small car category sunk to a new low of $2 on Wednesday, compared to its previous price of $10,455.

Premiums for other categories were reduced as well. All categories now stood at below $10,000.

Dealers have also begun slashing their prices. Kah Motor has reduced prices by around $3,000. The 2009 Honda City 1.5 i-VITEC is now priced at $58,300 instead of $61,800.

Champion Motors has cut prices by as much as $4,000 with the seven seater Suzuki APV going for $51,770. The 1.5L Suzuki Swift now stands at $49,199. The 1.6 Swift Sport (MT) has its price slashed by $1,000 to $56,771 while the 1.6 Swift Sport (AT) got a much larger discount of $3,000 to $57,771.

Prices at Borneo Motors have been slashed by as much as $6,000. The cheapest model, the Toyota Vios, retails at just below $44,000. Chery QQ by Vertex Automobile is also going for $5,000 less at $22,999.

Motor groups have appealed the Government to cut the COE prices to limit the supply of the COEs, citing that plunging COE prices will drive down the cost of new cars.

However, some car dealers still remain upbeat.

At Wednesday's Lexus GS450h hybrid launch, Mr William Choo, Lexus Sales Director of Borneo Motors, said that the unprecedented market situation would not last long. "It will definitely go up come next round," he stated.

"Especially so for Category A," Mr Choo said, "where not too many people are affected by the stock market."

The $2 premium for Cat A rewrote the record books - demand exceeded supply by a single bid.

Category B, however, would be "exciting" to watch out for, Mr Choo declared.

"The question is whether demand will meet supply," he said.

In spite of the soft market, Lexus anticipates an increase in orders. Already, Lexus has collected more than 50 orders for their new hybrid sedan.

(Additional reporting by Desiree Tan)