Singapore has experienced a continuous surge in quota premiums for most new issues of the Certificate of Entitlement (COE) since the last bidding exercise in April 2023, compared to the previous year 2022.
- The latest COE prices for Category A (cars up to 1600cc & 97kW) have increased from S$88,007 to S$96,501 (+9.65%)
- Category B (cars above 1600cc or 97kW) from S$108,006 to S$118,501 (+9.72%)
- Category C, for goods and buses (-1.89%) did not increase
- Category D (motorcycles) from S$11,690 to S$12,001 (+2.66%)
- Category E (including all categories except for CAT. C) from S$109,600 to S$118,990 (+8.57%.)
Latest Bidding Results: April 2023
The surge in COE premiums, except for Category Cm (goods vehicles and buses), is attributable to solid demand in the post-pandemic era, according to Mr. S, Iswaran, the Transport Minister of Singapore, in November 2023.
Besides, adopting electric vehicles (EVs) pushes the demand for COEs further across all categories by substituting traditional fuel vehicles with EVs.
Car analysts predict quota premiums will go down on prices in the second half of 2023 due to more COE supplies as a result of vehicle deregistration.
Concerning Category C for commercial vehicles and buses, the COE price slides from the high in 2022 but has increased by 182% from the beginning of 2022. Limited supply is another factor besides solid demand.
The “Early Turnover Scheme” allows traditional commercial vehicle owners to change for less polluted and fuel-efficient ones without bidding for a COE and to use the remaining prevailing quota premium (PQP), leading to a supply reduction for Category C.
Another factor is that the “Commercial Vehicle Emission Scheme” offering tax rebates to owners replacing old ones for cleaner commercial vehicles ended on March 31, 2023. Demand for new cars enforces the need and increases the price for the category further.
Good To Know
1. What is a COE and Its Importance?
Singapore’s Land Transport Authority (LTA) states: “A Certificate of Entitlement gives you the right to own and operate a vehicle in Singapore.” A COE (Certificate of Entitlement) entitles you to use a car for a maximum of 10 years on the road and make a COE renewal for another 5 or 10 years after expiry.
To solve the local traffic congestion, the government of Singapore, on May 1990, introduced the Vehicle Quota System (VCS) to control the number of vehicles on the road by setting up car quotas.
The VCS consists of 5 categories: Vehicle Category A comprises cars with equal or less than 1600cc, 130bhp, or 110kW; Category B cars over 1600cc, 130bhp, or 110kW; Category C goods vehicles or buses; Category D motorcycles; Category E including Categories A, B, & C.
2. How COE Works
The LTA uses an open auction system – the “open bidding exercise” to grant COEs to the public. The exercise usually takes place on the 1st and 3rd week of every month, beginning at 12 pm on Monday and ending at 4 pm on Wednesday for working days. Before this, The government makes details about the existing COE bidding cycle available, like the bidding periods and COE quota to be auctioned.
The process is as follows:
- A bidder submits a reserve price, an upper price a bidder is ready to pay for a COE.
- The bidding system lifts the Current COE Price (CCP) by an increment of S$1 until it reaches the reserve price.
- Bids are in the running as long as the reserve price is equal to or higher than CCP.
- A bidder is out of the game if their reserved prices are lower than a CCP unless he raises the price.
- The CCP is determined when the number of available bidders equals the quota at an exercise end.
- Bidders with reserve prices equal to or above the CCP will get COEs.
- All successful bidders will pay the Quota Premium (the latest single bid price) for a COE.
3. How to Bid?
Two bidding options are available to car owners to buy COEs:
- DBS/POSB ATMs for individual applicants: You must submit your bid through your account with one of 2 banks by using ATMs. You will register your vehicle under your name ID for a successful bid. You can also consult and appoint a car dealer to bid a COE for you.
- DBS, UOB, and Maybank for corporate applicants: Corporations should contact the banks for further information regarding the procedures.
1. Will COE prices come down?
The current COE bidding system builds on demand from potential car buyers, besides other factors like incentive schemes. Furthermore, the supply quota also affects COE prices for the next bidding exercise. Industry experts predict a reduction in costs due to a release of COE quotas in the second of 2023 in the expiry of EV and clean vehicle schemes.
2. How are COE prices calculated for renewal?
If you choose to extend your existing COE, you must pay the COE renewal price 10 years after a COE effective period. The renewal price, the preferential additional registration fee, is the moving average of COE prices for the last 3 months.
The COE prices in Singapore have seen a dramatic surge in quota premiums across all categories from 2022 until the latest result in April 2023. The reasons behind the increase are the high demand for EVs and the incentive scheme expiry. Experts forecast COE prices will come down in the second half of 2023 due to increased supply.
- COE prices for Cat. A: S$96,501, Cat. B: S$118,501, Cat. C: S$76,801, Cat. D: S$12,001, & Cat.E: S$118,990
- Strong demand constitutes the push for rising prices.
- Lack of supply and scrap of incentive schemes also contribute to the price increase.
- Industry experts predict a fall in price in the 2nd half of 2023.
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