- Premiums for the Open category Certificate of Entitlement (COE) in Singapore hit a new all-time high of SGD 152,000.
- Changes to the Vehicular Emissions Scheme (VES) have induced motor dealers to sell bigger cars and more powerful EVs before end of the year.
- COE premiums are expected to remain high due to the revised VES incentives and the necessity to meet year-end sales targets. If there’s unusual rush, premiums may cross even SGD 160,000.
The Straits Times recently reported that premiums for Open category COE have reached record-breaking levels. But why is this high COE actually beneficial for Singapore? And what could be the reasons and implications behind this COE premium hike? Let’s delve deeper.
Understanding the COE Premium Increase
The Certificate of Entitlement, or COE, is akin to a golden ticket which grants the right to vehicle ownership in Singapore.
Recently, the COE premium for the Open Category, predominantly used for bigger cars, surged by 5.09%, shattering its previous record. It now sits at an unprecedented SGD 152,000.
This is the fifth consecutive time this category has hit a new peak. Motor dealers suggest that the trend might be attributed to an attempt to stack up Open category COEs and meet year-end sales targets ahead of an expected cut in rebates.
A Surge in COE Bidding
Contrary to the rising COE premium rates, the COE premium for smaller cars has seen a slight dip, falling to SGD 104,000. However, the number of bids in this category has taken an upward turn.
Reporting on this, The Straits Times noted, “The latest result seems to have startled even the motor dealers… nearly 200 bids were entered in the final five minutes before the tender closed.” Astonishingly, for the first time since October 2021, the number of bids for any type of COE crossed the four-digit mark at 1,039.
This dramatic late surge in bids speaks volumes about the increasing demand and competition for COEs amidst the ongoing COE premium hike.
Impact of Changes in Vehicular Emissions Scheme (VES)
The Land Transport Authority (LTA) recently announced their plans to revise the Vehicular Emissions Scheme (VES) from 2024. The changes reduce incentives for hybrids and more powerful Electric Vehicles (EVs).
This has led to a rush amongst dealers to sell cars that will be impacted by this change before the new year. The premium for the powerful EVs and larger cars has thus gone up to SGD 146,002.
Consequently, motor dealers forecast a potentially continuous high in COE premiums due to the combined pressure of the revised VES incentives and the need to hit annual sales targets. We might even see the premium for COE going up to SGD 160,000 if desperate measures for high incentives are taken.
The Bigger Picture – Why High COE is Good for Singapore
Despite the prestigious price tag, a high COE premium could be seen as advantageous in the context of Singapore’s future. The COE system, albeit costly, is designed to control the vehicle population and thereby, traffic congestion in one of the most densely populated countries.
Higher COE premiums imply that fewer cars are sold, leading to fewer cars on the road, a significant cut-back on pollution and a winning situation for Singapore’s sustainability targets.
The increased competition for COEs due to limited supply nudges potential car buyers towards more affordable and environmentally friendly alternatives like public transport and non-motorised personal mobility devices, which is another step towards the green goals of Singapore.
Fellow Singaporean, what do you make of this shift in the COE landscape? Have you found more economical ways to commute in light of the increasing COE premiums? Join the conversation and let us know what you think in the comments section below.
