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Industry watchers expect COE prices to keep rising, possibly till 2023, after open category premiums hit S$99,999

SINGAPORE — Certificate of Entitlement (COE) premiums for cars are expected to keep climbing, possibly until next year, industry observers and players said, after open category premiums almost hit six figures in the latest bid this week. 

Cars on display at a showroom along Jalan Bukit Merah on March 24, 2022.
Cars on display at a showroom along Jalan Bukit Merah on March 24, 2022.
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  • COE prices almost touched six-figures in the latest bidding exercise, with the open category premium reaching S$99,999
  • Industry players and observers say premiums may rise further, given COE supply is constrained by the Government's zero net car growth policy
  • Various factors such as electric-vehicle policy change and economic recovery may also add upward pressure
  • However, it remains to be seen whether the COE premiums would reach 1994 record levels

SINGAPORE — Certificate of Entitlement (COE) premiums for cars are expected to keep climbing, possibly until next year, industry observers and players said, after open category premiums almost hit six figures in the latest bid this week. 

Prevailing conditions such as the tight supply for COEs and relatively elastic demand for bigger and luxury cars could see prices for those vehicular categories continue to climb, or at least hover around present levels for the foreseeable future, they told TODAY.

Other factors such as the shifting of more powerful electric vehicle (EV) models of up to 110kW to Category A, as well as Singapore’s economic recovery, could also nudge up COE prices.

COE premiums rose for almost all categories on Wednesday (April 6), reaching S$99,999 for vehicles in the open category, which is for any type of vehicles.

This was the highest price in nominal dollar terms since December 1994, when vehicle premium for those in what was then known as the Category Four classification cost S$110,500.

Experts noted, however, that S$100,000 in 1994 was worth a lot more than the same figure today, given the impact of nearly three decades of inflation.

Premiums for Category A or small cars (up to 1,600cc or 97kW) rose 2.01 per cent on Wednesday to S$72,996.

Premiums for Category B or large cars (above 1,600cc or 97kW) B dipped slightly on Wednesday to S$98,389, from S$98,889 in the previous bidding exercise.


In December 1994, the COE premium for what was then known as Category Four cars (above 2,000cc) reached a record high of S$110,500.

The premium for then Category Three cars (1,601 to 2,000cc) had peaked a month earlier in November that year, at S$95,100.

Assistant Professor Terence Fan from Singapore Management University (SMU), a transport analyst, told TODAY on Friday: “Back in the 1990s, the economy was booming, and real estate prices broadly rose – creating a potential wealth effect that exacerbated the effects of a booming economy.” 

While prices have ebbed and flowed since then, they reached another peak in January 2013.

That month, the premium for vehicles in the open category came in at S$97,889. Premium for Category B cars reached S$96,210. COE prices for smaller cars, too, breached the S$90,000 that month, at S$92,100.

More recently, since the Covid-19 pandemic, prices across the three categories have largely grown from the S$41,000 to S$49,800 range seen in February 2021.

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The tight supply for COEs is a perennial cause of upward pressure on premiums, the experts told TODAY.

The Government has adopted a zero-growth policy for cars, which means that the number of COE quotas issued is constrained by the number of old COEs deregistered.

Ms Sabrina Sng, managing director at Wearnes Automotive, a regional distributor and dealer of premium and luxury vehicles such as Swedish brand Polestar, said: “COE quotas have been on the downtrend since last year, so it's not surprising that COE (prices) have moved up continuously with the declining supply.”

Associate Professor Walter Theseira, an economist at the Singapore University of Social Sciences, said that people generally hold onto COEs until the certificates expire after 10 years, unless COE prices fall by enough that "the paper value, the refund they get from scrapping it" makes it worthwhile to deregister earlier.

This is why, he added, the COE supply is largely shaped by a 10-year cycle.


In the latest bidding exercise, the premium hike has not been even across the various categories.

The Category A premium has grown from S$45,600 in the first bidding of April last year to S$72,996 on Wednesday, a 60 per cent jump.

Over the same period, Category B premiums shot up 88 per cent from S$52,309 to S$98,389. For the open category, the jump was 92 per cent.

Mr Raymond Tang, managing director of Yong Lee Seng Motor, said: “The reason is that they are luxury vehicles. People don't particularly fuss over maybe the increase of S$5,000 or S$10,000 on the premiums.”

Mr Wong Kan Sing, managing director of Autolink Holdings, opined that high premiums for Category B cars would also have spillover effects on Category A, because some prospective buyers may have been priced out from the former and turn to smaller cars instead.


Mr Wong said that Tesla EVs, which are seeing "very strong demand at the moment”, are also contributing to the COE hike in luxury categories. All Tesla cars require a COE from either Category B or the open category as they exceed a power output of 97kW.

This however, may change as the Government will be adjusting the Maximum Power Output threshold for electric cars for Category A from 97kW to 110kW, starting from May.

Mr Tang said that some may even rush to put in bids for the second exercise in two weeks time before the EV policy change takes effect.

The rebates offered for registering an EV might compound the demand for Category A cars, Mr Wong said.

“Savings (from rebates) will be passed over to the COE bidding; they will use this saving to secure COE,” he explained.

On the flip side, independent car broker Steven Lim said that any near-term demand increase for EVs among mass consumers may be tempered by the still-developing charging infrastructure here.


The reopening of Singapore’s border and its economic recovery would also place upward pressures on COE premiums, the experts said.

Mr Wong of Autolink Holdings felt that the point-to-point transport sector will start to aggressively bid for COEs again to grow its fleet of vehicles, because an influx of visitors would increase demand for such services.

Asst Prof Fan from SMU pointed to how a surge of high-income expatriates relocating here have already reportedly pushed up rental prices. A similar impact may be seen in COE premiums, he said.

Assoc Prof Theseira said that this is compounded by local income growth, “especially at the higher end”.

“You add it all up, it's basically demand growth in exactly the population who can afford cars and who can afford to pay high premiums for cars,” he said.


Experts and players, however, had varying views on how long the premium rally will last.

Asst Prof Fan expects the overall increase in COE to be “moderate”, because the demand for vehicles may come mainly from those who previously did not own one.

It would also be difficult to compare to the prices seen in 1994, he said, as “the dollar values look the same but the underlying drivers are very different.”

Assoc Prof Theseira pointed out that “1994 levels are significantly higher than current levels, given that there has been significant inflation and real income growth”.

“It is quite meaningless to talk about 1994 levels when HDB flats today cost what landed property cost in the 1990s,” he added.

Ms Sng from Wearnes Automotive predicted that COE premium will stay elevated “at least till next year”, owing to the limited supply.

Mr Wong of Autolink said that “from 2014 to 2019, we saw a big supply of COE”.

“So the next increase in supply is 2024. So I think the high COE will stay for at least two years, before it starts to ease,” he said.

At the end of the day, Assoc Prof Theseira stressed that despite the complaints of some people, the high COE premiums are really driven up by people who “are happy to pay the price necessary to drive a car”.

“And so, as long as the economy's doing well, you get more rich people in Singapore. Unfortunately, that means pressure on COE prices. That's the reality.”

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