How To Calculate Car Value Depreciation in Singapore

Whether you’re buying a new or used car in Singapore, it’s crucial to consider how its value will depreciate every year. We’ll show you how you this works, and how you can calculate it in less than a minute.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Apr 19, 2024

A car being driven in Singapore

When you’re buying a new or used car, it is important to consider the annual depreciation of the vehicle’s value. This depreciation will show you the true cost of owning and operating the car every year, in addition to the costs of gas and maintenance.

This concept is an important one as it impacts your car’s value and ultimately, how much you can earn by selling it in the secondhand market once you’re ready to let go of it.

The formula for calculating depreciation is:

Annual Depreciation = (Total Cost of VehicleSale Value of Vehicle) / Number of Years in Service

To illustrate this, a vehicle which is purchased for S$100,000 and sold for S$20,000 after being used for 10 years would have an annual depreciation of S$8,000.

However, the process of calculating your vehicle’s depreciation is more complicated in Singapore. There are a number of significant taxes and fees associated with owning and operating a car in Singapore due to the country’s small size and government’s aim to limit the number of vehicles here to prevent traffic congestion.

As a result, there are a number of other important costs to include in the “Total Cost of Vehicle” portion of the formula above.

We’ll show you what these costs are, and how you can include them when calculating the total cost of your vehicle in order to accurately determine how much its value drops every year.

Related: Best Car Insurance Plans in Singapore


Table of Contents

Certificate of Entitlement (COE)

Singapore is among the world’s most densely populated countries, and overcrowding the roads has always been a concern for the government here. With this in mind, Singapore implemented a quota system in 1990 to regulate how many vehicles are in operation here.

To summarise, this system requires car owners to bid for a Certificate of Entitlement (COE) in order to register, own, and use their vehicle in Singapore for 10 years.

While most countries have a similar registration systems for vehicles, Singapore is special in that the cost of a COE can be enormous. This makes it a vital cost to include when you’re calculating the total cost of your vehicle. Occasionally, it can even be equal to the cost of a car.

That’s because COEs are sold on an auction basis. Furthermore, the high demand for car ownership and subsequent competition for COEs have driven up prices across the years. The chart below shows the latest COE prices as of March 2024. As you can see, a COE in any category will set you back a pretty penny.

COE CategoryVehicle TypeCOE Price
ACar below or equal to 1600cc and 130bhp, or 110kWS$85,489
BCar above 1600cc and 130bhp, or 110kWS$96,011
CGoods vehicle and busS$70,112
EOpen (Every vehicle except motorcycles)S$95,856

Once your COE ends after 10 years, you must decide whether you want to renew it at its latest price or scrap your vehicle entirely. A COE has no resale value whatsoever at the end of its 10-year validity, making it a true wasting asset.

On the other hand, if you scrap your vehicle before its COE is up, a credit for any unused time will be paid out to you. This credit is pro-rated, meaning that if you use your car for only half of the full COE validity (5 years) before scrapping it, you’ll receive 50% of the amount paid for the certificate.

However, the COE is just one component of car depreciation in Singapore. There are three more factors which you need to take into account, starting with your car’s open market value.

Open Market Value (OMV)

The open market value of a vehicle, also known as OMV, is assessed by the Singapore Customs when it enters the country.

This value includes the purchase price of the vehicle, shipping, and any other charges included in its delivery to Singapore. The seller of the vehicle will know the OMV of their vehicle and should be able to provide this information as you consider purchasing it.

Although your car’s OMV isn’t used directly in the formula to calculate its annual depreciation, it’s important in determining its registration fee and additional registration fee.

Registration Fee (RF) and Additional Registration Fee (ARF)

Think of your car’s registration fee (RF) and additional registration fee (ARF) as taxes to register a vehicle in Singapore. While the RF is a flat fee of S$350, there is now a tiered ARF system for vehicles registered with COEs too.

Your car’s ARF is based on its OMV and ranges from 100% to a whopping 320% of your car’s value. Check out the full breakdown:

Vehicle’s OMVARF Rate
S$20,001 – S$40,000140%
S$40,001 – S$60,000190%
S$60,001 – S$80,000250%
S$80,001 and above320%

When combined, the COE and ARF are the main reasons why cars are so expensive in Singapore.

Preferential Additional Registration Fee (PARF)

Fortunately, you stand to receive a Preferential Additional Registration Fee (PARF) rebate from the Land Transport Authority of Singapore when you decide to let go of your vehicle and scrap it. How much you receive is based on your car’s age when you de-register and scrap it.

Vehicle’s AgePARF Rebate
5 years old and below75% of ARF or S$60,000 (whichever is lower)
5-6 years old70% of ARF or S$60,000 (whichever is lower)
6-7 years old65% of ARF or S$60,000 (whichever is lower)
7-8 years old60% of ARF or S$60,000 (whichever is lower)
8-9 years old55% of ARF or S$60,000 (whichever is lower)
9-10 years old50% of ARF or S$60,000 (whichever is lower)
Above 10 years oldNone

When you’re calculating your car’s annual depreciation, factor this figure into the “Sale Value of Vehicle” portion of the formula. Although you won’t know the exact year you’ll stop using your car, prepare for the outcome where you keep it for 10 years and receive 50% of the ARF you paid or S$60,000.

Putting It All Together

As mentioned above, your car’s annual depreciation is calculated using this formula:

Annual Depreciation = (Total Cost of VehicleSale Value of Vehicle) / Number of Years in Service

After we’ve covered the various additional costs of owning a vehicle in Singapore, it’s critical to include the cost of your vehicle’s COE, RF, and ARF in the “Total Cost of the Vehicle” portion of the formula. And as mentioned earlier, any PARF rebate you receive should be added to the “Sale Value of Vehicle“.

By putting all these costs (and one rebate) together, you can figure out the true cost of owning and operating a vehicle in Singapore. This lets you make a truly informed decision regarding whether a car is worth the money you’re going to part with.

With that being said, there are circumstances which dictate that you absolutely need a personal vehicle, whether it’s for professional or personal reasons.

As your car ages, it’s even more crucial to have car insurance to protect you and your vehicle. Check out the best plans in the market now!

Compare Car Insurance in SingaporeFind Out More

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