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Do cars last only 10 years?

More than two decades ago, the validity of Certificates of Entitlement (COEs) was set at 10 years. Even after tremendous advances in automobile technology and increases in how long drivers own cars, however, that timeline has not changed. Perhaps it is time to relook at whether to extend how long COEs last.

It may be time to review how long car COEs should last. Photo: Reuters

It may be time to review how long car COEs should last. Photo: Reuters

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More than two decades ago, the validity of Certificates of Entitlement (COEs) was set at 10 years. Even after tremendous advances in automobile technology and increases in how long drivers own cars, however, that timeline has not changed. Perhaps it is time to relook at whether to extend how long COEs last.

Decades ago, far fewer car owners may have wanted to keep their car for more than a decade. Many cars were not durable enough to stay in good shape; drivers had safety concerns, and older cars had higher repair bills.

Many manufacturers also did not expect cards to last very long, so warranties were shorter and odometers often only ran to 99,999 miles (160,000 km).

Now, as The New York Times put it recently, 200,000 miles is the new 100,000. Materials used to manufacture cars are better, advances in corrosion protection make them last longer and customer satisfaction surveys show cars having fewer problems every year. The average age of cars in the United States is 11 years, and more than 20 per cent are at least 16 years old.

Indeed, car manufacturers are so confident that warranties are getting longer. Ten-year warranties for Toyota and Hyundai cars are common in many places, and in some countries Chrysler offers a lifetime warranty for the engine, transmission and drive system.

Cars remain safer for far longer, too. Newer models have more safety features, from more sophisticated designs to airbags and better brakes. And in any event, as Consumer Reports put it when assessing car safety, “the driver is a critical factor, especially among teens and older drivers”.

Despite all these advances, there have been few, if any, formal reviews of whether COEs should last longer. Even though the Vehicle Quota System (VQS) Review Committee in 1999 did mention that public consultations yielded “a few suggestions ... to extend the validity period, or to base the validity on usage”, its report did not discuss changes.

More recent reviews, in 2010 and last year, focused largely on tweaking the technical aspects of allocating and bidding for COEs.

BENEFITTING DRIVERS AND THE PLANET

Extending the COE duration could bring a multitude of benefits.

Rising transportation costs have a big impact. Drivers are thus keeping cars longer, with rising COE prices and economic uncertainty high among the reasons for the percentage of cars between four and eight years old skyrocketing from 13 per cent of all cars in 2007, to 65 per cent by late last year.

Allowing drivers to keep their car longer without a new COE, rather than scrapping one car and buying another, would save drivers money and could take some of the sting out of higher transportation costs.

Replacing cars has environmental impacts too. Manufacturing a car requires iron, aluminium, plastic, steel, glass, rubber, copper and more, as well as plenty of energy.

While calculations are complex, writer Michael Martineck used the US Argonne National Laboratory GREET model to calculate whether it is better to keep an old car or buy a new one. He found, for example, that simply replacing a Honda Civic with a newer one would not be environmentally beneficial.

While the impact depends on the type of car, and replacing a Rolls-Royce with a Prius would benefit the planet, keeping many cars longer may have less negative environmental impact than buying a new one and results in less landfill.

And it is not as if safety is likely to be compromised in today’s more durable cars. Cars are built to last far longer, even for Singaporeans driving a relatively high average of 19,000 km per year. And in any event, biannual or annual inspections help ensure automobile safety.

NO INCREASE IN CARS

Yes, business and government revenue would be affected. While automobile dealers might be less happy, automobile repair shops and inspection centres may well be delighted. And since the VQS was supposed to regulate the number of vehicles rather than to generate revenue, the Government should not be disappointed if revenue changes.

Admittedly, the process for extending COEs could be tricky. One alternative could be to do so only for new cars, which might upset existing car owners. Another could be to extend the validity of all COEs, which may require considerable analysis to develop an equitable process. There could be other options as well.

If COEs are extended, the total number of cars would not need to increase, since car owners could simply keep their car longer. Yes, many drivers may choose to change their car sooner so they have the latest model. Yet others could reduce their costs while continuing to use a reliable car.

Taking the time to review the duration of COEs, rather than just the process for purchases, would mean that VQS practices would finally be keeping up with technological changes, and it could offer a multitude of benefits to car owners and, more broadly, throughout Singapore.

Richard Hartung is a consultant who has lived in Singapore since 1992.

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