COE Method Revision and the Change in Price Trend. What Can You Expect?
As of July 2022, the prices of COE have skyrocketed to the 6-digit category, with the COE price of the open category going at an all-time high of S$110,524. Following such spikes in prices, making the cost of vehicles in Singapore more pricey, the Land Transport Authority has revised the framework of Singapore’s vehicle quota works.
What does the revision result in terms of prices, and If the revision is beneficial for prospective car owners? Stick on to this article to find out!
How COE Works Before the July Revision
COEs, also known as Certificate of Entitlement, is a registration certificate to provide the right to own a vehicle for a decade's tenure. The purpose of COE is to control the number of vehicles allowed on Singapore’s roads to prevent over-congestion in the country. COEs are released through open bidding exercises conducted twice a month.
Before the revision, COEs, according to LTA, the quota of COEs available for bidding in each quarter is mainly based on the number of vehicles deregistered in the previous quarter, with a one-month lag time for processing and computation. They are also based on the annual vehicle growth rate based on the total number of vehicles in Singapore at the end of the year and expired COEs, replacement commercial vehicles under the Early Turnover Scheme and the total population of taxis at the time.
However, following the massive spike in prices, LTA has given a media release stating that they plan to "reduce the quarter-on-quarter volatility of COE supply while being responsive in returning the COEs of deregistered vehicles to the bidding pool”.
The Revised Method And Prices For August to October 2022
To “reduce the volatility of the COE supply”, as well as be more “responsive in returning the COEs of deregistered vehicles to the bidding pool”, the new revised model, that will be used from August of 2022 onwards, will calculate the supply available for bidding based on a rolling average of vehicle deregistrations over two quarters instead of one.
LTA also mentioned, "The start of each new COE quota bidding period will continue to be one month after the close of each calendar quarter".
So the number of COEs from August to October will be half the number of vehicles deregistered from January to June rather than in the previous calendar year quarter. The number of COEs for the following quarter, November to January, will then be half the number of vehicles deregistered from April to September.
Under the adjusted method, the COE quota for August to October will be 10,581, which is 11.5% less than the previous quarter, LTA said, adding that this translates to a monthly quota of 3,526 COEs for all categories combined.
Assistant Professor Terence Fan from the Singapore Management University mentioned that The revision should smoothen out short-term fluctuations and “counter-balance knee-jerk, short-term bidding behaviour that may accentuate small, random fluctuations”.
Car Insurance
- Third Party Damage Coverage
- S$5,000,000
- Workshop Type
- Authorised
- Coverage for Loss/Damage to Vehicle
- 100% of Market Value
Budget Direct's is one of the cheapest available, with a typical car insurance quote averaging 48-54% cheaper than the average comprehensive plan for sedan and SUV drivers, regardless of no claim discount (NCD). However, this price cut comes at a cost. Budget Direct's medical, personal accident and roadside assistance coverage comes at an extra cost. Nonetheless, the base premium is low enough that drivers can choose the coverage that matters to them and still pay super low prices.
- Third Party Damage Coverage
- S$5,000,000
- Workshop Type
- Authorised
- Coverage for Loss/Damage to Vehicle
- 100% of Market Value
Budget Direct's is one of the cheapest available, with a typical car insurance quote averaging 48-54% cheaper than the average comprehensive plan for sedan and SUV drivers, regardless of no claim discount (NCD). However, this price cut comes at a cost. Budget Direct's medical, personal accident and roadside assistance coverage comes at an extra cost. Nonetheless, the base premium is low enough that drivers can choose the coverage that matters to them and still pay super low prices.
What Does This Mean?
Following the revision of the COE model, prices fell for some categories, especially for larger cars in the Q32022 bidding exercise compared to Q22022.
Under the adjusted method, the COE quota for August to October will be 10,581, LTA said, adding that this translates to a monthly quota of 3,526 COEs for all categories combined.
According to CNA, the premiums for larger and more powerful cars in Category B fell to S$107,001 from S$110,003, and open category COEs, which can be used for any vehicle type but end up being used mainly for large cars, fell to S$113,000 from S$114,001.
However, for other categories, there is still an increase in the prices for different categories, such as Category A (a S$1,011 increase), commercial vehicles (a S$1,00 increase), and motorcycles (a S$90 increase).
These are the figures taken from SGCARMART as of 4th August 2022.
Current Prices of COE as of 4th August 2022
| COE Category | CAT A (Cars ≤ 1,600cc & 130bhp, or 110kW) | CAT B (Cars > 1,600cc or 130bhp, or 110kW) | CAT C (Goods Vehicle & Bus) | CAT E (Open) |
|---|---|---|---|---|
| Quota Premium | $80,000 | $107,001 | $56,089 | $113,000 |
| Change | Up $ 1,101 | Down $ 3,002 | Up $ 1,200 | Down $ 1,001 |
| Prevailing Quota Premium | $74,099 (Aug) | $102,078 (Aug) | $52,883 (Aug) N.A | |
| Quota | 554 | 474 | 95 | 167 |
| Bids Received | 689 | 612 | 168 | 293 |
Is This The Right Time To Purchase a Vehicle?
Despite the more stable price changes following the revision, do not expect the prices of COE to fall in the short run as more and more people are deciding to purchase a vehicle, with affluent households purchasing multiple vehicles. Even if there is a fall in COE prices, there will still be an increasing demand for cars in the long run.
There is also an exponential increase in COE cost in the past two years. The open category (Cat E) for August 2020 round 2 was $38,110; the cost of the same open category for August 2022 round 1 is currently sitting at $113,000, a staggering 296.5% increase. The revised COE model is not intended to reduce the prices of COE but to make it less speculative than the previous system. However, we still have to look at customer perception and behaviours and how the car dealership industry adapts to the revision.
There may be speculations that the prices will eventually fall or stabilise in the long run as more and more people move past their obsession with cars. We have yet to see the long-term implications and trends of the current revision.
There is never a right or wrong time to purchase a vehicle if there is a high demand for them. The best solution is to calculate the pros and cons of owning a car in Singapore, compared to travelling around in alternative ways like public transport or taxi/private hires.
Car Loans
- Interest Rate
- 2.28%
- Maximum Principal
- Up to 60% or 70% of car price
- Maximum Term
- 7 years
OCBC offers the most affordable car loans in Singapore for new cars, charging just 2.28% p.a. on loans for new vehicles. Like other lenders, OCBC covers up to 70% of your car’s price and is available for 1-7 years. However, OCBC also offers quick, one-minute approvals and the ability to get approved for the loan before or after you decide on the car. The early settlement fee is 1% of the outstanding loan amount and 20% on the interest rebate.
- Interest Rate
- 2.28%
- Maximum Principal
- Up to 60% or 70% of car price
- Maximum Term
- 7 years
OCBC offers the most affordable car loans in Singapore for new cars, charging just 2.28% p.a. on loans for new vehicles. Like other lenders, OCBC covers up to 70% of your car’s price and is available for 1-7 years. However, OCBC also offers quick, one-minute approvals and the ability to get approved for the loan before or after you decide on the car. The early settlement fee is 1% of the outstanding loan amount and 20% on the interest rebate.
Conclusion
In conclusion, LTA has provided a revision of how the COE supply is calculated to lower the price volatility in the long run, but only time will tell how effective the revision will be considering other factors at play.
Besides COE, a car owner should also be aware of the cost of other things, such as motor insurance, loans, parking, road tax, and petrol/charging if you are an electric car owner.
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Fiona is a full-stack marketer working in the digital sphere for more than six years.
A self-proclaimed foodie and bargain hunter, she wants to bring the best deals and value to the community around the world. When not working on her pet projects, Fiona can be found sipping a coffee while reading a paperbacks or watching mystery thrillers on Netflix and Disney+.